ACA 1095 PITFALL:
ACA Audit Predictors:
Relevant Blog Entries
Self-insured plans are required to include spouses and children in the Covered Individual section of the 1095-C. Not surprisingly, many employers with less than 1,000 employees were not able to provide this data as easily as expected as dependent data was not maintained in the respective HR system. Often times, employers had to rely upon carrier enrollment data to fill the void. Employers assumed the data was complete and accurate. As they say “never make assumptions.”
Once the data was obtained, the next step was to integrate it. And that process was prone to creating errors primarily because at times, the carrier’s enrollment data used a different employee ID than the employer’s HR or payroll system. As a result, many dependents were simply not linked (to the respective employee) or were linked to the wrong employee. Not only this translate into incorrect forms, but this also raised employee relations issues. After all, how could John Doe who is enrolled with a spouse and children not have any dependents in his respective Covered Individual section and how could Mary Smith, who is single, have John Doe’s dependents. Clearly this is not a good situation.
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 dependent information and also put controls in place to further ensure the right dependents were in fact associated with the respective employee. Employers have the opportunity to ensure all dependents are handled correctly and penalties are avoided. As they say, “there’s no time like the present – do it now!”
- H. Gerver 7/27/16