You may have heard the phrase, “It’s a marathon, not a sprint.” That can definitely be said of the journey organizations have had in preparing for the first year of the Affordable Care Act (ACA) annual reporting. And American writer and runner Hal Higdon said, “Motivation remains key to the marathon: the motivation to begin; the motivation to continue; the motivation never to quit,” which describes the months of intense time-sensitive work and dedication needed as we were all racing towards the IRS annual reporting deadline of March 31st.
In this first year, ADP assisted over 25,000 clients, ranging in size from 50 – 50,000 employees, in managing the ACA eligibility, affordability and IRS reporting for over 16 million employees, including printing and distributing more than 10 million Forms 1095-C. The Form 1095-C provides organizations with documentation they need to demonstrate they are ACA-compliant and provides key information to their employees about their health coverage. And, as a fun fact, if you stacked the 10 million Forms 1095-C ADP issued in this first year, it would reach the height of nearly two Freedom Towers! Next year, clients can choose to suppress printing if they obtain opt-in permission from their employees following the IRS guidelines.
What’s coming for the next leg of the race?
The race isn’t over yet – there’s stricter criteria in effect for 2016 reporting. Applicable Large Employers are now required to offer 95% of their ACA full-time employees’ health coverage in 2016 vs. 70% in 2015 to avoid penalties, and employers with 50-100 employees, who were exempt in 2015, will have to meet this requirement in 2016. In addition, 2015 1094-C transmittals are due by June 30, 2016 and the entire cycle, like W-2s and W-3s, begins again with 2016 Forms 1095-C due to individuals by January 31, 2017!
Let’s remember, too, important additional ACA elements that remain outstanding such as Exchange/Marketplace Notices. When you receive one, it means that at least one of your employees applied for coverage through an ACA Marketplace or Exchange and was deemed eligible to receive a premium tax credit or subsidy toward their payment for health coverage. These Notices are opportunities to look at the coverage offered, if any, and make sure you are in compliance from a penalty perspective. While you may have not received one yet, they are coming.
In addition, with the first year of annual reporting, the IRS gave a penalty pass for best efforts, but for the second year the stakes are higher and information will be scrutinized more deeply.
While there was a lot of learning in this first year, organizations now know to start early on gathering data – and that it’s easier if their data is not in separate disparate systems across multiple vendors. Click here to register for our next webinar where we’ll be sharing more key findings to help you avoid unexpected hurdles.
For a few interesting, ADP fun facts check out our newest infographic!