This article was originally published in August of 2015. We have made several revisions to the content to keep you current about product releases and updates and filing deadline changes as well as links for further reading.
At Sage Summit in New Orleans last summer, I had an opportunity to discuss the Affordable Care Act (ACA) reporting requirements that would start in January of 2016. At long last, my enthusiastic curiosity was quieted. I had many questions! In this blog, I initially shared the useful information that I found about using Sage 100, versions 2015 and 2014 to issue 1094-C and 1095-C forms. Since that time, I have delved deeper into using Sage 100 version 2016 and learned of changes made by the IRS. Read on for details!
ACA Reporting with Sage 100
On November 5, Sage 100 2016 became available to the public!
It includes enhancements that comply with the ACA requirements.
Once Sage 100 version 2016 was released, I began to spend time getting familiar with the software, and wrote about how it can help (or not) with ACA reporting. See the December 23 article, ACA Reporting with Sage 100 version 2016: Part 1, in which I break down the top 8 pieces of information that employers are required to provide. In ACA Reporting with Sage 100 version 2016: Part 2 (Addendum–Codes), you’ll find sample scenarios and proper coding for each one.
Product updates (PU) for earlier versions of Sage 100 that accommodate ACA reporting needs:
2015 (PU3, PU1); 2014 (PU5, PU7); 2013 (PU9) and 4.50 (PU8)
The program changes in versions 2014 and 2015 give users a repository to input manually gathered information. This makes it possible to generate and printed forms, or electronically file them with Aatrix. Sage has also included a report to help employers determine if they meet the threshold requirement for filing.
In the article, Sage 100 ERP Payroll Enhancements to Manage ACA Requirements, my colleague Julie Lewis, a senior HRMS consultant nicely details these changes,
As a disclaimer, I will say that this write-up is not legal advice, tax advice, a political opinion or the last word on the ACA reporting. Here, we will not discuss how to determine if an employee should be considered full-time or how a policy’s affordability is calculated. If you’d like further information, please visit the Internal Revenue Service website for Instructions for Forms 1094-C and 1095-C.
Who should read this:
The content of this article applies to businesses that are NOT self-insured, as they have more extensive reporting requirements and a different set of regulations. (In fact, even more regulations are sure to be released as the healthcare law gets ramped up for full implementation in the next several years.)
Here, I will talk specifically about gathering information for the 1095-C form for non-self-insured employers. Note that the 1094-C is simply a summarized transmittal form.
Please note that the ACA reporting requirements for the 1094-C/1095-C do not replace the need to report the total cost of health insurance on the W2 form with box 12 code of “DD.” The 1094-C/1095-C is required in addition to reporting the total cost health insurance in box 12 on the W2 with the box 12 code of DD.
Who is required to receive the 1095-C form?
The ACA requires an employer provide a 1095-C form for any employee who has worked at least 130 hours in any one month. That is, if the employer is subject to reporting requirements—even if the employee was not offered health care coverage.
When are the 1095-C forms due?
On December 28, 2015, the IRS announced extended deadlines. The 1095-C form is now due to the employee on March 31, 2016. Employees must file the 1095-C and 1094-C with the IRS by May 31, 2016, on paper, or electronically by June 30, 2016.
We recommend verifying any specific requirements and deadlines with the IRS. The latest resource that we have found from the IRS was published on December 29, 2015, Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C).
Offer of Coverage
The offer of coverage is reported in section 2, line 14 of the 1095c and uses 1 of 9 available codes.
Lowest Cost Coverage Available
Line 15 of section 2 is the monthly amount of the lowest cost coverage available for an employee-only policy. This has minimal essential coverage, thus providing minimum value (MEC/MV). This amount is entered here even if the employee chooses a higher cost plan.
For example, even if an employee chooses a policy that covers his self, spouse and children, and pays $500 a month, line 15 will read as if he had chosen the employee-only option at the lowest cost of $100.
Acceptance of Coverage
Line 16 reflects whether the employee enrolled in coverage, and if not, why not, and also uses one of 9 available codes.
Series 1 Codes
Deciding which Series 1 code to use, in most cases, appears pretty straight-forward. The simplest code to use is 1A. This code is used when the employer offered MEC/MV to employees, spouses, and dependents, and if that coverage for the lowest cost employee-only policy was less than 9.5% of the federal poverty line for a single person. (For 2015, that is around $92/month.)
A little perk of using this code is that the employer does not have to input the monthly amount in line 15. All other codes require the monthly employee-only policy amount to be input in line 15. The available Series 1 codes are as follows:
1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line, and at least minimum essential coverage offered to spouse and dependent(s).
1B. Minimum essential coverage providing minimum value offered to employee only.
1C. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) (not spouse).
1D. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to spouse (not dependent(s)).
1E. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse.
1F. Minimum essential coverage NOT providing minimum value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents.
1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year.
1H. No offer of coverage: An employee was not offered any health coverage or the employee was offered coverage that is not minimum essential coverage. (Note – This code is used in the month an employee terminates employment if the coverage terminates on the last day worked and the termination date is not the last day of the month.)
1I. Qualifying Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage, received an offer that is not a qualifying offer, or received a qualifying offer for less than 12 months of coverage.
On line 15, input the lowest cost of employee-only coverage available. If using code 1A, this line can be skipped.
As you can see, a different situation can apply to each employee. This will require employers to spend time evaluating how to report for each employee. In some cases, the situation may be very straight forward. In others, you may have to report for an employee hire and termination all in the same year.
Read the companion piece, 2016 ACA Reporting and Sage 100: Series 2 Codes, where we continue to show you how to navigate section 2 of the 1095-C form using series 2 codes.
Prepare for year-end reporting.
Be ready with each employee’s situation. If you are using a version of Sage 100 that already has the reporting fields available, now is the time to get started filling them out. As you hire and/or terminate employees, update their fields accordingly.
Each year, we hope you get a jump on gathering needed information so you are ready to report at year-end!