Employer clients using an Affordable Care Act compliance solution vendor may have already received, or will be soon receiving, surveys or questionnaires requesting information about the employer’s workforce. Industry experts say the surveys often use technical jargon or request data that some employers are unsure of where to find, highlighting a real need for adviser help with the process.
While some ACA compliance solutions integrate with an employer’s data management system to collect the necessary data to complete IRS reporting forms required as part of the ACA’s so-called employer mandate, other vendors rely upon employers to provide the data manually.
Many employers working with vendors have, therefore, received questionnaires with complicated inquiries about how the employer determines full-time employees, what periods of time the employer is using for measurement, questions about administrative and stability periods, and so on.
Some of the questions are “bewildering to the employer and often not well explained in the vendor’s questionnaire,” according to Ed Fensholt, senior vice president, director of compliance services for Lockton Benefit Group and Brad Mandacina, assistant vice president, director of HR tech and outsourcing for the Lockton Benefit Group.
Employer clients have been and will continue to be seeking guidance from their benefit advisers with the questionnaires, they say.
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“At the very least, it presents another opportunity to foster the relationship with the client,” Mandacina says. “Clients are lost in looking for guidance. If the broker does not proactively engage, they will be in the crosshairs. They need to be involved and educating and helping their clients. It’s just good counsel to encourage them to do that.”
“Employers will look to their brokers to help shepherd them through this,” Fensholt adds. “This is a very confusing process for the employer in this first year. They want to turn to somebody for these answers and they will look to their broker or employee benefit consultant to do that. We need to be prepared to tell the client what that means and how to fill out those questionnaires.”
Shortcut methods
Many of the questionnaires, they say, are seeking data to help vendors complete the employer’s Form 1094-C, the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, particularly Line 22, which asks whether employers are using one of several reporting shortcut methods or offers for relief.
Line 22 asks employers to check off whether they are using the qualifying offer method, qualifying offer transition relief, Section 4980H transition relief or the 98% offer method.
“What is befuddling to employers is that a lot of these surveys are written by technical people and they don’t really explain very well what they are asking,” Fensholt says.
For example, he says, the qualifying offer concept was invented by the IRS as a sort of reward to the employer for offering “decent coverage” to one or more full-time employees at a greatly subsidized rate, but the reward is complicated and sometimes, the two say, not particularly meaningful.
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Understanding these shortcut methods or relief offers is not generally something employers have prepared for, but advisers should have.
Further, most employers don’t qualify for them, or if they do, the relief may only be granted for part of the requirements of the employer shared responsibility rule, the two say.
Applicable large employers must report whether an individual is covered by minimum essential coverage and that an offer of minimum essential coverage that provides minimum value was made to each full-time employee.
So, for example, employers can claim to be using the 98% offer method if, for all months, it offered minimum value coverage to at least 98% of its full-time employees with respect to whom it had an obligation to supply a Form 1095-C, and it offered at least minimum essential coverage to the employees’ children through the month they reach the age of 26.
Some Lockton clients do qualify for the 98% offer method, Fensholt and Mandacina say, but it buys relief from only one requirement: the obligation to report the number of full-time employees, by month, in column (b) of Form 1094-C.
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