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3 brutal ACA paperwork headaches

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When members of Congress were drafting, and debating, the legislation that became the Patient Protection and Affordable Care Act of 2010 (PPACA), one goal was to attack the United States’ legendary health insurance administration burden.

Lawmakers hoped the PPACA exchange system, the summary of benefits and coverage (SBC) health plan “milk carton labels” and other provisions would eventually minimize the administrative burden on individuals, providers and employers.

So, how minimal is the administrative burden that PPACA imposes on employers?

See also: Broker: PPACA is distracting us from health

From Kim Buckey’s perspective, the burden is not so minimal. Kim Buckey

Buckey is vice president of client services at DirectPath, a firm that helps big employers with benefit plan compliance and communications. She is in charge of helping those employers create their summary plan descriptions, their SBCs, their 1095-C coverage reporting forms and 1094-C coverage summary forms, and other forms and notices.

See also: States push for longer benefits summaries

She is quick to point out that complying with PPACA administration requirements is likely to get easier for employers over time.

“The first year is always the worst,” Buckey said in a recent interview.

But Buckey described some SBC headaches that have already lasted since 2012, and 1095-C and 1094-C notice headaches that could come back next year. For a look at three, read on. 

SBC computer research

1. SBC length limits

The SBC is supposed to give users a simple, standardized description of what a specific plan really covers. It’s supposed to be the version of the SPD that ordinary human beings can actually use.

EBSA estimated in February that all 2.3 million employers that put out SBCs spend an average of only about 12 minutes creating the SBCs, and a total of only about $9.3 million on SBC-related costs other than employee time.

Buckey did not give specific SBC production cost figures, but she said that, in some ways, creating an SBC is as complicated and resource-intensive as producing an SPD.

In many cases, an employer, its plans and its benefits advisors can create an SPD for a given plan once every five years, or even once every 10 years, and the SPD can be as long as the creators want.

When an employer, its insurers, its plan administrators and its benefits advisors are responsible for creating an SBC, they must gather information from many different sources, and they have to struggle to hold the SBC to the statutory limit of four pages given in PPACA.

The “tri agencies” — the U.S. Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA) — have tried to wiggle the limit, by, for example, letting SBC creators fill two sides of four standard sheets of typing paper. But the tri agencies resisted earlier this year when state insurance regulators begged for permission to let SBCs fill 10 to 11 sides of paper, to give the extra explanations that unsophisticated health coverage users often need, and the coverage details that advanced users want.

Shoehorning an SBC into eight sides of typing paper may not be all that difficult for an employer that’s hired a compliance firm to create a master benefit plan information database, and to use the database to create SPDs, SBCs and other forms, Buckey said.

More on this topic

Buckey sees little employer resistance to SBCs.

“They’re pretty much resigned to it at this point,” she said.

But Buckey said she’s heard some horror stories, including one involving the owner of a midsize business who had locked himself into a conference room and was trying to produce his own SBCs, in-house.

Any entity that wants to create its own SBCs had better have the right infrastructure in place, she said. 

See also: Feds hope to shift to new SBC standard April 1, 2017

A bundle of fiber optic cables


2. 1095-C data blending

The 1095-C may look a little like the W-2 compensation form that employers have been sending workers for decades. The IRS estimated in 2014 that a typical employer could produce its 1095-C forms, for employees and the IRS, in 12 minutes and the 1094-C summary form, for the IRS, in two hours.

But creating a 1095-C form is actually more complicated than producing a W-2, because the employer has to get information from the payroll department, the benefits providers and other sources.

The information “is coming in from so many different sources in so many different formats,” Buckey said.

See also: Form 1095-C: PPACA employer reporting demons

Scary calendar

3. 1095-C deadlines 

Buckey said timing makes sending out 1095-C forms especially burdensome.

An employer has to get data streams from several different sources, as of the end of the year, and be ready to send the notices to employees, and former employees, in time for the current and former employees to use the notices to file their own tax returns. 

See also: 

3 ways the 8962 PPACA tax form update could drive your clients crazier

IRS posts new PPACA tax form drafts


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