ACA 1095 PITFALL: MISSING FORM RECIPIENTS

ACA Audit Predictors:
Missing Form Recipients

Relevant Blog Entries

Per the IRS instructions every ACA eligible employee during the respective reporting year must receive a 1095-C form. Expected recipients include active as well as inactive employees. Often overlooked recipients include:

  1. Terminated employees
  2. Waivers
  3. Newly eligible part-time employees
  4. Newly eligible variable hour employees
  5. Employees that were eligible for at least one month

While the 1095-c candidate list appears obvious, required recipients are inadvertently excluded. Why does this happen? While the reasons are numerous, likely causes are any combination of:

  1. Bad data
  2. Poor QA
  3. Non-integrated systems
  4. Lack of knowledge
  5. Inexperienced staff
  6. Inappropriate measurement period management
  7. Blatant disregard for the seriousness of the regulations

Since 2015 is a “best efforts” year, it will be interesting to learn whether or not the IRS perceives similar scenarios as “best efforts” or if they’re going to issue penalties. Hopefully (last I checked, hope is not a strategy), the IRS will kindly turn a blind eye and the employer (and third party) worlds will wake up and get it right.

In order to mitigate future risks employers should thoroughly review the recipient list to ensure all qualifying employees do in fact receive their respective forms (BTW – our company offers both 1095 Audit and 1095 Diagnostic services).

Employers have the opportunity to ensure all expected recipients received their forms and future penalties are avoided . As they say, “there’s no time like the present – do it now!”

- H. Gerver 7/27/16

howie-gerver

About The Author: Howard Gerver, of ACA Managed Services, is an authority on 1095 compliance. He and his team of ACA experts are the go-to specialists for companies who wish to avoid trouble with the IRS. They offer a range of ACA services, including ACA audits (also known as 1095 audits)