ACA Compliance Dan Doolin Integrity Data 1072020 Integrity

ACA Compliance Dan Doolin, Integrity Data 10/7/2020

Integrity Data’s leadership in human capital management since 1996 More than 7, 500 organizations worldwide use our technology to improve businesses processes Engaged by Microsoft to author payroll and human resources upgrades to the ERP system known as Microsoft Dynamics® GP We have been immersed in ACA compliance software since 2012, consistently a step ahead: • In beta testing for an entire year before the IRS release of final ACA regulations, which came in February 2014. Two weeks later, our first installation was done. • We were printing IRS Form 1095 -C in October 2014 – four months before the IRS draft was approved. 2 © Integrity Data 2015. All rights reserved.

The ACA compliance burden on employers 3 © Integrity Data 2015. All rights reserved.

Regulatory reporting: Intensified Monthly breakdowns: The ACA standard for workforce reporting Before the ACA, workforce reporting was about summaries: Form W-2 Yearly summaries Form 941 Quarterly summaries 4 © Integrity Data 2015. All rights reserved.

What an employer must do overall & when [Annually] [Monthly] [Continuously] Provide Form 1095 -C to all ACA-defined full-time employees Calculate employee eligibility for offer of health coverage Track every employee’s hours of service File 1094 -C with the IRS Determine ALE status Track cost of the coverage offered Track affordability of coverage offered to each employee 5 © Integrity Data 2015. All rights reserved.

Hours of service – the ACA standard for calculating full-time status • Holiday • Jury duty • Illness • Military deployment • Incapacity • FMLA • Layoff • Leave of absence • Vacation Time to include: Population of Form 1095 -C hinges on hours of service to the employer, not just paid hours of work on the job 6 © Integrity Data 2015. All rights reserved.

Who should produce IRS Form 1095 -C? For 2015: • Every employer with 100 or more full-time employees or full-time equivalents • Every employer with 50 to 99 full-time employees or full-time equivalents whose organization did not meet certain criteria for extended relief • Every employer who is self-insured, regardless of the number of employees Starting in 2016: • Every employer with 50 or more full-time employees or full-time equivalents • Every employer who is self-insured, regardless of the number of employees 7 © Integrity Data 2015. All rights reserved.

Who should get IRS Form 1095 -C? • Every employee whose hours of service (not hours of work) total 130 in any one month of a calendar year (using the monthly measurement method) • Employees in a stability period (those who, using the look-back measurement method, were found to be full-time) • Any employee who is on an employer-provided health insurance plan – even if that employee was not full-time in any month of the calendar year 8 © Integrity Data 2015. All rights reserved.

Must-knows in preparing for IRS filings 9 © Integrity Data 2015. All rights reserved.

Filing deadlines for ACA employer forms February 1, 2016 Form 1095 -C to employees February 29, 2016 Its transmittal, Form 1094 -C, to the IRS March 31, 2016 E-filing of Form 1094 -C 10 © Integrity Data 2015. All rights reserved.

Two classes of Employers THE BURDENED MAJORITY • Has always offered health care coverage that is of quality and at minimal cost to employees • Workforce is stable • In compliance with the ACA mandate THE FORCED MINORITY • Offered limited health coverage or no coverage to employees • Workforce defined by: • Hourly workers with varying schedules • High turnover • Lower-wage workers that affordable coverage be offered to eligible employees and their dependents 11

Pain points of each class THE BURDENED MAJORITY must document the • Hours of service for every employee • Offers of coverage to every employee • Attributes of the coverage offered THE FORCED MINORITY must • Document the hours of service for every employee • Identify employees eligible for offers of coverage • Document the attributes of the coverage offered • Test whether the coverage offered meets ACA standards 12

Reporting needs of each class THE BURDENED MAJORITY • Yearly production of Form 1095 -C for employees • Yearly filing of Form 1094 -C with the IRS THE FORCED MINORITY • Yearly production of Form 1095 -C for employees • Yearly filing of Form 1094 -C with the IRS • Monthly internal reporting to identify newly eligible employees • Monthly internal reporting to test affordability of coverage offered 13

“Be aware that …” If you are an Applicable Large Employer, yearly IRS reporting is not optional – it is a federal requirement with penalties attached for non-compliance. Automation is needed to connect all the data points accurately. Fines – which will be significant – cannot be deducted as business expenses. 14 © Integrity Data 2015. All rights reserved.

The IRS is prepared to send penalty notices! $173. 67 a month per employee, times all eligible employees Penalty for offering no coverage $260. 50 a month per employee, times the number of full-time employees who got subsidized coverage on an exchange Penalty for offering noncompliant coverage $500 per required form – capped at $3 million Penalty for not filing 15 © Integrity Data 2015. All rights reserved.

“Embrace reality. ” The Affordable Care Act has not been repealed. The penalty-assessment period for the ACA employer mandate began on January 1, 2015. Automation will be needed. Tools must be found to comply with a federal requirement. 16 © Integrity Data 2015. All rights reserved.

When is ACA functionality in Microsoft Dynamics GP® enough? 17

For the burdened majority ACA changes to GP 2013 R 2 and later releases should be enough • When the company is singly owned • Has a stable workforce with mostly salaried employees. • If there will be fewer than 250 submissions of Form 1095 -C 18 ACA functionality standard in GP will not aggregate employee records from multiple GP databases and then consolidate them for Form 1094 -C reporting – as required. ACA functionality standard in GP will not generate a file for electronic submission of Form 1094 -C, which is required for 250 and more 1095 -C submissions.

For the forced minority ACA changes to GP 2013 R 2 and later releases will not be enough to • Identify which employees must receive a 1095 -C • Test the affordability of coverage offered • File electronically. 19 ACA functionality standard in GP supports population of Form 1095 -C according to the monthly measurement method for determining eligibility. Employers at risk of ACA penalties need enhanced functionality to use the look-back measurement method for determining employee eligibility.

What an employer must focus on immediately: Determination of ALE (Applicable Large Employer) status A tracking system to identify when variable-hour employees become eligible for offers of health insurance Need-to-knows for ALE determination • 50 or more full-time employees or full-time equivalents (2016 or beyond) • 100 or more full-time employees or full-time equivalents (2015 only, with conditions) • Total of all in commonly controlled or affiliated groups Need-to-knows for eligibility tracking • Classification of full-time vs. variable-hour (part-time) is important • Hours of service must be tracked for all employees – exempt and non-exempt • 30 -hour average per week = full-time • Shared employees’ hours are accumulated 20 © Integrity Data 2015. All rights reserved.

What an employer must determine immediately: Which ACA measurement method will you use to determine eligibility? Which least-cost health insurance plan will you sponsor? Need-to-knows in choosing measurement methodology Need-to-knows for least-cost employersponsored health plan option • • • Monthly vs. Look-back measurement method • Look-back: Length of look-back period is important Feasibility of corresponding administrative period (especially for initial measurement period) • It’s pay periods, not check dates (unlike W-2 and 941 reporting) 21 Does it provide minimum value? Is the “least-cost” option affordable? What safe harbor should they use? For 2016 and beyond: Does it provide spouse / dependent coverage? © Integrity Data 2015. All rights reserved.

Questions – Fire away! 22 © Integrity Data 2015. All rights reserved.

Thank you! Learn more integrity-data. com Contact Me 888. 786. 6162 ext. 0203 dwdoolin@integrity-data. com Dan Doolin dwdoolin@integrity-data. com 23 x 0203 888. 786. 6262 © Integrity Data 2015. All rights reserved.