“Something Wicked This Way Comes” is a story by the legendary science fiction writer Ray Bradbury. The story is about the ominous arrival of a travelling carnival led by the “mysterious Mr. Dark”. After the carnival arrives several townspeople are tricked into servitude to him caught unaware of Mr. Dark’s sorcery. The story is an appropriate analogy to the looming Affordable Care Act (ACA) health insurance reporting requirements that begin with the 2015 tax year.
The Requirements
Spelled out in IRS sections 6055 and 6056, the rules require companies with 50 or more full-time equivalent employees (FTEs) that provide health coverage to report information on this coverage to the IRS and to covered employees beginning with the 2015 tax year. This information is required to be reported on IRS Forms 1094 and 1095, and the first returns are due by February 29, 2016.
Companies must provide each eligible employee with Form 1095, detailing information about the employee, any offers of coverage, the months such coverage was offered, who was covered, and the cost to the employee. On Form 1094 companies must detail their full-time employee count, total employee count, and whether minimum essential coverage was offered. Related companies may be required to file a combined return.
The Dilemma
The dilemma for companies subject to these requirements is gathering the information necessary to complete these forms. Trying to recreate the information required for these forms after-the-fact will be daunting. Companies need a system that will capture the information required for these reports on an ongoing basis as employees come and go throughout the year.
The Solution
The most effective way for companies to automate this process and to establish a system for capturing this information is to implement an onboarding and employee benefits management system. Such a system not only can automate the new employee process but also can manage benefits enrollment and administration. Most importantly, a robust platform can generate informational reports, including the required IRS Forms 1094 and 1095.
There are many onboarding and employee benefits management systems available in the marketplace today and the costs can vary wildly from zero to several thousands of dollars per month, but whatever solution you use should be comprehensive, providing not only the platform but compliance advice, training and platform customization. The solution should not just be software but a well-thought-out system of tools, policies and procedures. This is the solution we offer our clients.
The Conclusion
Like the townspeople in “Something Wicked This Way Comes”, companies that do not prepare for the coming IRS reporting requirements will find themselves caught off guard scrambling to re-create the required data. Implementing a comprehensive solution that automates employee onboarding, benefits and reporting will ensure that you are on your toes when you have your inevitable encounter with “Mr. Dark.” Contact me at mdmowski@comprehensivebenefitservices.com if you would like to learn more about the solution we offer.