Over 500 clients and guests joined Noah Katz of PSK Supermarkets and Jim O’Connell, Washington DC compliance analyst and consultant for an informative webcast, “The Affordable Care Act—Get Ready; Change is Coming.” Attendees asked great questions about Affordable Care Act employer compliance as well as scenarios for 2017 legislative and regulatory change. Below we answer their questions—with the understanding that answers are intended for educational and informational purposes only, not legal advice. Questions have been edited for clarity.  

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Affordable Care Act Webcast Your Questions: Our Answers

Wed Jul 6, 2016

Over 500 clients and guests listened June 15 to a special Ceridian webcast, “The Affordable Care Act—Get Ready; Change is Coming,” featuring presentations by Noah Katz of PSK Supermarkets and Jim O’Connell, Washington DC compliance analyst and consultant.

But they didn’t just listen. They asked great questions during the time set aside to learn more details about Affordable Care Act employer compliance as well as scenarios for 2017 legislative and regulatory change. Below we answer their questions—with the understanding that answers are intended for educational and informational purposes only, not legal advice. Questions have been edited for clarity.

1. Regarding look-back measurement periods to determine status as an ACA full-time or part-time employee, if the look back period is for 12 months, even though the employee may work 32 hours one week, 20 the next and so on...if they don't have 1,560 hours for the year, they would not be eligible for an offer of health coverage, correct?

Answer. Regardless of the look-back period an employer may choose, the key question is whether the employee averages 30 or more hours per week. If the employer chooses a 12-month look-back period and the employee does not average 30 or more hours over that period, the employee is not considered a “full-time” employee within the meaning of the Affordable Care Act during the subsequent “stability period.”

2. In Hawaii we are mandated to offer health coverage to employees who work an average of 20 or more hours per week. For ACA employer health coverage information reporting, is it permissible to report those 20+ hour employees to whom we offer health insurance?

Answer. Yes.

3. In regards to higher education - for adjunct professors and coaches - what do you recommend on their hours worked for purposes of ACA reporting? Might they be considered full-time employees even if they average less than 30 hours per week? Is there a different standard for adjuncts and coaches?

Answer. Yes. IRS has issued special rules for determining the full or part-time status of adjunct professors and certain other higher education personnel. See this link for a helpful explanation.  

4. Not to get ahead of things, but when determining if the employee is FT or PT, we have employees who work 24 hour shifts but work sporadically throughout the year. Is the FT determination week by week or month by month?

Answer. The Affordable Care Act requires employers to use “look-back” measurement periods to determine if an employee qualifies for an offer of health coverage during a subsequent “stability period” of equal length. The measurement period can be chosen by the employer (see IRS regulations) but the key point is whether the employee worked an average of 30 or more hours per week during that period. For purposes of ACA information reporting, offers of health coverage are reported on a monthly basis.

5. Our highest cost employees in terms of medical expenses are our oldest employees. If a cap on tax-free health care is enacted in 2017 as a substitute for the 40% “Cadillac Tax,” wouldn’t it negatively affect older employees as much as it curbs tax advantages for high income earners?

Answer. Members of Congress would be sensitive to the implications for older Americans of proposed tax changes. Legislation, or implementing regulations if a health insurance cost tax exclusion cap ever became law, would probably add some flexibility to allow older workers to exclude somewhat higher amounts to reflect their higher costs.
Bear in mind that a cap of this kind would apply to the present law tax-free treatment of employer-provided health insurance premiums, not to the cost of healthcare itself, so all employees would likely have the same annual insurance premium. Remember also that we are focusing on the value of the employer-paid insurance premium that the employee now completely excludes from income tax.

6. Can you speak to corporate risk and responsibilities companies have in 2017, 2018, etc., based on what's in the Affordable Care Act now?

Answer. Not sure what specific corporate risks and responsibilities the question refers to, but employers can expect penalties to rise over time for failure to offer minimum essential coverage that is affordable and provides minimum value. Also, the 40% Cadillac Tax is in the law now and scheduled to take effect in 2020—a huge risk for employer-provided coverage. Employers also need to be concerned about growing IRS penalties and enforcement actions related to the Sec 6055 and 6056 employer reporting obligations now in the law and regulations.

7. When you count 50 or more employees to determine if the employer is an ACA “applicable large employer,” is that in the US only? What if we have 50 in Canada and 10 in the US?

Answer. The definition of an “applicable large employer” in the Affordable Care Act regulations counts only an employer’s US employees.

8. For Ceridian/Dayforce clients, is there functionality to print and send the 1095-C forms to employees? In other words, is there a "print-service"?

Answer. Electronic versions of Form 1095-C will be available to employees in Self-Service and may be printed by the employee. For employees that do not opt for an electronic form only, Ceridian Print Services will print Form 1095-C and distribute it based on the client defined distribution method.

9. For those employers who will drop coverage for part time employees (who were once eligible) at the end of their stability period, as opposed to at open enrollment, what tools will you use to administer employer term coverage throughout the year?

Answer. During an Administrative Period, the Employer can use the features within PPACA Administration to gain insight into the employees that no longer qualify at the end of a Stability Period. Tools are available for the benefit administrator to end the health coverage, notify the employee and begin the COBRA process.

10. How does a company submit corrective forms to the IRS for 2015 reports? Does Ceridian file? Are there specific guidelines available from the IRS?

Answer. For clients using Dayforce, there are options within the tool to prepare corrections and transmit to Ceridian Tax Service for electronic filing; there is a CTS Amendment Filing fee of $250 per FEIN for corrections.

For other Ceridian Tax Service clients, we offer an ACA Amendment service for clients whom we filed for the Filing Year with corrections. If Ceridian did not file the authoritative 1094-C information return for the ALE member (FEIN) for a Filing Year we do not offer the corrections filing service.

And yes, there are specific IRS guidelines to follow to file corrections.

Finally, for clients using Dayforce, there are options within the tool to prepare corrections and transmit to Ceridian Tax Service for electronic filing; there is a CTS Amendment Filing fee of $250 per FEIN for corrections.

11. We submitted our Forms-1095 early, but a few came back with errors after being submitted to IRS. We have reviewed the forms and they look fine. How do we find out what is wrong? Who is the IRS contact? We have been asking for almost 3 weeks and even did a support ticket without answer.

Answer. The error message from the IRS should provide direction as to what the error is and what field or area it is found on a return. It is our understanding that applicable large employers have expressed concern that error messages are sometimes not specific; that IRS does not always clarify why files are rejected or indicate what actions need to be taken to resolve issues.

It is our understanding that name/TIN validation errors are among the most frequent, causing the majority of “accepted with errors” messages.

12. We were able to get our Forms 1095-C out, but it’s the Forms 1094 that are giving us trouble. We are fortunate to have IT staff who actually code but this reporting is taking many hours of their time. This has been the biggest challenge by far. Does the Ceridian product handle the actual IRS reporting?

Answer. Yes, Ceridian files the 1094-C (transmittal) and subsequent 1095-C (employee) returns electronically to the IRS. We also provided a 1094-C statement for each FEIN we filed on your behalf to the Ceridian Tax Services client contact on record.

To be sure, six years after the law’s enactment employers seem to have thousands of questions about Affordable Care Act compliance, especially regarding health coverage information reporting and determinations of full-time employee status.

As expected, Ceridian’s June 15 webcast elicited many questions, suggesting that ACA compliance appears to be growing even more complicated as time goes on and key employer provisions like Forms 1094 and 1095 health coverage information reporting take effect.

This special Ceridian webcast and partial list of Q’s & A’s also confirm that employers are strongly committed to understanding the Affordable Care Act, to meeting their compliance obligations in good faith and learning from each other about one of the most comprehensive and complex compliance laws in history.