In preparation for the highly anticipated IRS year-end reporting for the
Employer Shared Responsibility (ESR) provision under the Affordable Care
Act (ACA), Paychex, Inc., one of the nation’s leading providers of
payroll, human resource, insurance, and benefits outsourcing solutions
for small- to medium-sized businesses, today released a checklist to
help guide business owners through this uncharted territory.
Employer Shared Responsibility (ESR) provisions, which require IRS
year-end reporting from subject business owners, are in place to
determine if full-time employees are offered adequate and affordable
health care coverage. From reporting the number of full-time employees
to tracking personnel changes that may push a business above the 50+
full-time employee (including full-time equivalent) threshold, IRS
year-end reporting could be a daunting task for any small business owner.
Beginning in January 2016 for the tax year 2015, businesses with 100+
full-time employees, including full-time equivalents, may be subject to
ESR penalty assessments. Businesses with 50-99 full-time employees in
2014, including full-time equivalents, may be eligible for relief from
ESR penalties for the year 2015, but only if they meet specific
qualifications. Such employers must still complete IRS year-end
reporting requirements in order to certify their eligibility for such
exemption.
While the tax filing is not required until early 2016, it is important
to act now. Below is a checklist to help guide business owners through
IRS year-end reporting:
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Prepare now to avoid playing catch-up later.
It is critical to have at least 12 months of payroll information tracked
as businesses are expected to use historical hours and wages – by month
– for every employee to determine (1) if you are considered an
Applicable Large Employer (ALE), (2) which employees are considered
full-time based on 30 hours per week, not 40, and (3) whether the
coverage offered to those full-time employees is considered adequate and
affordable. For more information and tips on tracking your employees’
hours, click
here.
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Determine if you are an Applicable Large Employer (ALE).
ALEs in 2015 consist of 50 or more full-time employees, including
full-time equivalents (FTE), based on your 2014 calendar year workforce.
Full-time employees are defined as working an average of 30 hours per
week, or 130 hours per month in the calendar year. FTEs are calculated
by using the hours of service for all employees (including seasonal
workers) who were not full-time employees in any given month capped at
120 hours per employee, divided by 120. Click
here for more information.
-
Determine your full-time employees.
ESR guidance provides business owners multiple methods to measure their
employees’ hours of service. Hours can be measured on a monthly basis
during the calendar year or throughout a pre-determined “look back”
period, which affords employers a more predictive model for determining
which of their variable hour employees may be considered full-time.
Every employee who was determined to be full-time for at least one month
during the calendar year must be provided IRS Form 1095-C. For more
information to help you determine your employees’ status, click
here.
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Review your plan coverage information.
ACA Section 6056 requires ALEs to file information returns with the IRS
and provide statements to their full-time employees about the health
insurance coverage the employer offered. This requires information
pertaining to the medical coverage offered to full-time employees on a
monthly basis throughout the calendar year. ALEs must determine and also
report that the coverage they offer meets the minimum actuarial value
(MAV) standards, as well as affordability requirements, outlined in the ESR
provisions.
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Complete and submit forms 1094-C and 1095-C.
These IRS forms provide certification as to whether you offered
full-time employees the opportunity to enroll in insurance that provides
Minimum Essential Coverage at a MAV of 60 percent for each month of the
year. Form 1094-C and Form 1095-C are transmittal and employee
statements, respectively, filed by the employer with the IRS.
Additionally, employers must provide Form 1095-C to their full-time
employees. Draft instructions for both forms can be found on http://www.irs.gov/Forms-&-Pubs.
Year-end reporting timelines are similar to W-2 forms. Form 1094-C and
1095-C must be filed with the IRS each year no later than February 28
or, if filing electronically, by March 31 following the end of the
calendar year for which the return applies. Form 1095-C must be provided
to full-time employees on or before January 31 following the end of the
calendar year for which the statements apply.
Understanding and complying with these new health care reform
requirements may be overwhelming for business owners to handle on their
own. With this in mind, beginning in tax year 2015, Paychex will offer
IRS year-end reporting assistance through its Employer
Shared Responsibility Services to help ease the burden of these new
requirements.
For continuous updates on health care reform provisions impacting small
business owners, visit www.paychex.com/health-reform.
About Paychex
Paychex, Inc. (NASDAQ:PAYX) is a leading provider of payroll, human
resource, and benefits outsourcing solutions for small- to medium-sized
businesses. The company offers comprehensive payroll services, including
payroll processing, payroll tax administration, and employee pay
services, including direct deposit, check signing, and Readychex®. Human
resource services include 401(k) plan recordkeeping, section 125 plans,
a professional employer organization, time and attendance solutions, and
other administrative services for business. A variety of business
insurance products, including group health and workers' compensation,
are made available through Paychex Insurance Agency, Inc. Paychex was
founded in 1971. With headquarters in Rochester, New York, the company
has more than 100 offices serving approximately 580,000 payroll clients
as of May 31, 2014. For more information about Paychex and our products,
visit www.paychex.com.
Stay Connected with Paychex
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Copyright Business Wire 2014