Employers struggling with ACA reporting requirements
Employers have been penalized nearly $31 billion in 2016 for violations of the Affordable Care Act health insurance mandates, a recent Accenture study found, providing more opportunity for brokers to provide assistance.
Under the ACA, large employers are required to offer minimum essential coverage to 95% of full-time employees or pay a $2,160 penalty per full-time employee. On top of that, employers are at risk of another $6 million in penalties if they are unable to comply with the ACA’s information reporting requirements, according to Deloitte.
A recent study by Deloitte’s tax arm found that the information required to be filed can be difficult for clients to obtain. Sixty-percent of respondents to a Deloitte survey reported it has been a challenge to get answers to technical questions, as employers lack the resources to handle the compliance responsibilities of the new reporting requirements, the study found.
While this data may not be new for an employer, it is the first time they had to pull it together in one place, as relevant pieces are often in different parts of the organization, explains Robert Davis, employee benefits consultant at Deloitte. “It is a struggle to figure out who will own [the data],” he adds. “Who will put it together and who will put in a format that the IRS is requiring.”
The systems in the past were not set up to track this type of data together, adds Judy Mester, tax director at Deloitte Tax. It is unique situations that require employers to gather data that was not previously disclosed, she explains.
Jennifer Lovett, president and CEO of brokerage Crystal Financial Insurance, says her large groups are struggling to complete the forms. “They have issues and are all afraid of making a mistake,” she says. “They are … not confident it was done right. It is confusing.”
As employers struggle, it is time for advisers to step up and help their clients, both Mester and Lovett say.
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Deloitte works with their clients to help them “first and foremost … understand the role of the employer mandate provisions,” Mester says. “We then help them to understand and obtain the different sources of data that are being housed within their own systems, other vendor systems, time and attendance systems, payroll, etc.”
Lovett is helping both her clients and other non-clients who contact her with questions, providing both valuable feedback to the employer and her. “I’m learning as I do it,” she says. “The more knowledge I have, the better I am with my clients. I look at everything as an education opportunity.”