The June 30, 2016 deadline for employers to file their applicable 2015 health care tax return with theIRShas passed.For many employers, the damage is done.Skipped deadlines, misclassifications, and ignoring of notices regarding the Premium Tax Credit have left many employers bewildered and full of regret, expecting to dig into their pockets to pay penalties.
However, the 2016 tax year isn’t over yet, and with a few points you can easily avoid making the same mistakes next year when filing for this year. The site Health Care Attorneys has released a valuable tip sheet with five common mistakes that employers make when filing their forms. Here is a breakdown of their suggestions:
Mistake: Employee Misclassification
Understanding how to properly classify an employee with regard to number of hours and measurement (monthly, look-back, etc.) is vital. If incorrect, under Section 4980H, you may be penalized. Be precise with your classifications, have your paperwork updated, and be sure to have your employee manuals explicitly detail how employees are classified within your organization. That includes part-timers, contract employees, and even those with paid and unpaid leaves of absence as well as rehires.
Mistake: Lack Of Policies
ACA compliance is nothing to play around with, especially when employees can change statuses rather easily. As explained above, many employees can qualify for many things—from rehires to leaves of absence and changes in hours. It’s best to have policies for if and when these situations arise, and once again ensure they are detailed in employee handbooks.
Mistake: Undocumented Coverage Offers
Without overstating the obvious, be sure to have documentation of the scope of your employee’s coverage. This will prove essential, especially if it turns out that an employee cannot afford it and is eligible for a Premium Tax Credit. That can result in an Employer Shared Responsibility payment being assessed against you.
Mistake: Misfiling of
With regard to Forms 1094-C and 1095-C, the real issue revolves around either not knowing they must file these forms, not knowing how to or mistaking them for other forms. Understand the documents you are holding. Every Applicable Large Employer (50+ full-time equivalents) must file both of these forms for each of their FT employees. Regardless of circumstances and changes in classification, if at any month during the year an employee became full-time, they were eligible for health care and these forms must be filed. If you have any questions about this information, contact the IRS.
Mistake: Having Procedures, But Not Using Them
It may seem like a no brainer to some, but it’s not. If you have best practices in place, use them. If they’re modified at all throughout the year, document the changes. Good faith is not always good in the eyes of the IRS. If you’re still unsure of your ACA compliance, visit OutThinkRisk.com.
