We get it- when summarized, ACA Compliance doesn't seem that difficult. All you have to do is take the data you're already using for your payroll, get some additional retiree employee data, organize it all and fill out a couple forms and send it up to the IRS... right?
We wish it were that easy. Unfortunately, the reality of ACA Compliance is hours upon hours of hard work, aggregating data from several sources, and significant research on the IRS' expectations. Even if you complete it all before the deadlines come up, there are huge gaps that may force your company to pay significant fees.
The IRS estimates that you will need four hours to complete and file Form 1094-C and twelve minutes to complete and file each individual's Form 1095-C. This doesn't include calculating lines 14, 15, and 16. The IRS' estimate assumes you already have all of your data, it does not include the work required to transform the data in the required XML format.
Sound simple? Let's break it down in real terms:
Say you have 300 FTE employees at your non-profit organization. You have to get their forms ready and the deadlines are coming up faster than you were expecting.
300 employees x 12 mins/Form 1095-C = 60 Hours (3600 mins) of work to complete
The HR employee in charge of ACA Compliance for your organization makes $80,000/year. That's roughly $40/hour. It's going to cost you $2,400 out of their yearly pay to get this done. Not too bad, right? Did you take into account the potential curveballs that may come your way? The IRS may change their regulations, or it may be much more difficult than expected to gather all of your data from your HCM System. We advise you to take these into account when discussing and deciding on your plan for ACA Compliance Tax Year 2016.
Let's do another one.
You're the HR Manager of all 5,500 state employees in Illinois. Your boss asked you to "handle this," like it's no big deal. Little does he know that fulfilling ACA requirements is making anyone from HRIS companies to IRS filing experts throw their hands up in resignation and frustration.
5,500 employees x 12 mins/Form 1095-C = 1,100 Hours (66,000 mins) of work to complete
You make $100,000/year, roughly $50/hour. The time you spend completing this small task your boss tasked you with will cost her over $55,000, not to mention the hours you'll spend frustrated and reaching for a coffee.
Seeking out expert ACA Compliance analysts is crucial. Not only does it save money, it will save countless hours of work and guarantee you the safety of avoiding the steep penalties the IRS will dole out. However, we recommend you take your time and do the research, there are ACA Compliance consultants that will guarantee that they will complete A-Z and ensure a successful, penalty-free filing. Oftentimes, there is a "assembly required" loophole. We'll explore more of this later, but want to stress the importance of ensuring that the ACA Analysts you select have the ability to complete every step.
At BenefitScape, we guarantee a software system that translates any company data into the IRS' XML language. We will aggregate the employee and any retiree data or COBRA data into our data warehouse and load the data used to print form 1095-B/C. After we send the forms out to all applicable employees, the forms are e-filed to the IRS AIR System; any errors will be reported and corrected and the IRS AIR reporting will be complete for Tax Year 2016.