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Definition – A comprehensive review of employee indicative, benefits and health insurance data as well as the ACA software that utilizes this data on either a monthly or quarterly basis.

Rationale – The rationale is two-fold. First, the systems and processes that help manage the ACA IRS reporting process likely pre-date Healthcare Reform. Hence, anything that deviates from the pre-established norm is at-risk. Second, since “best efforts” no longer apply the risk for material penalties exists.


1. 95% Plus Testing – Since 95% of ACA eligible employees are now required to be offered health insurance the need for accurately managing the eligibility process for hourly and variable hour employees is particularly high. Source data including indicative and time & attendance information as well as the systems using this data to help track hours and determine eligibility vis-à-vis Measurement Periods must be reviewed to further ensure compliance.

2. 1095-C Part 2 – The need for accurately determining the Offer of Coverage (line 14) and Employee Status (line 16) logic is critical as this information 1) will be utilized by the IRS to determine compliance and corresponding penalties, and 2) directly impacts employees particularly if they are in an individual penalty situation.

Action Plan

  1. Review Measurement Period design and programming logic
  2. Review indicative data (particularly new hires and terminations)
  3. Review time & attendance data
  4. Review newly eligibles
  5. Review offers of coverage
  6. Review offers of coverage codes
  7. Review monthly premium amounts
  8. Review employee status codes

Since we are no longer in a “best efforts” year, employers should embrace best practices or simply accept the dire likelihood of material penalties. In order to mitigate future risks employers should thoroughly review and improve their supporting processes and technologies. Employers have the opportunity to fortify their environments and avoid penalties. As they say, “there’s no time like the present – do it now!”


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)