Top 5 Employee Data Audits to perform for accurate ACA reporting

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Elisabeth Lewis
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1 Top 5 Employee Data Audits to perform for accurate ACA reporting Understanding the Patient Protection and Affordable Care Act (PPACA) and the annual reporting requirements requires detailed knowledge of tax and legal issues. Ascentis strongly recommends your organization seek out professional services from your insurance brokers, legal counsel or other professional advisors. It is incumbent that the Client validates the accuracy of all data prior to publishing 1095-Cs and filing with the IRS. Ascentis relies on the Client providing accurate information, as well as auditing all outputs of the ACA process, and at no time shall Ascentis, assume any liability from inaccuracies in the 1095-C s, 1094-C, or from any errors, flaws, failure, or fault of the software which would cause it to produce an incorrect or unexpected result. Table of Contents Introduction 2 ACA Data Audit # 1 The Importance of Employment Status History 3 ACA Data Audit # 2 Complete Calendar Year Compensation History 4 ACA Data Audit # 3 Accurate Payroll Directory/Payroll Code Assignment 5 ACA Data Audit # 4 Dependent Social Security Numbers 7 ACA Data Audit # 5 Complete Calendar year Benefit History 8

2 Introduction The importance of accurate employee data in relation to accurate 1095c reporting cannot be overstated. With so many employee changes to keep up with each pay period, month and year it can be a daunting task to feel confident that you have the correct pieces in place to ensure your 1094 and 1095c forms are filed correctly. Ascentis would like to help you reduce your worry and increase your confidence that your employee data is in good shape! Join us as we step through 5 critical audits you will want to perform to ensure accurate employee history resides in your Ascentis HR product. Page 2

3 ACA Data Audit # 1 The Importance of Employment Status History What role does the Employment Status play in 1095c reporting? The Employment status is used to identify which months out of the year the employee was eligible for benefits. What should I be concerned about? Each employee needs a full Calendar year of history on this tab. If you joined Ascentis in July and only brought in the current record on your employees, they may not have the full year indicated. For example, if you started on Ascentis in July and only brought in the employees current record, the current record may not be the status the employee was at all year. Did you have anyone switch from Part-Tim to Full Time or vice versa? Accurate status history is vital! Where is it located? The employment status is found on the Employment tab of the employee profile in HR. Go under Employee Manager. Click on the little yellow folder near the top of the window to open the Employee Finder. Select an employee and open their profile. Go to the Employment tab. What is the best way to audit this? Ascentis recommends that you run a change history report to review all employees to ensure the full year is recognized within the system. Check out the related video on auditing the Employment History to see an example of how to run an audit report. I found employees missing history records. What is the best way to fix this? Review and add in any missing employment history records in the window for each employee. Check out the related video on auditing the Employment History to see an example of how to edit these records. Page 3

4 ACA Data Audit # 2 Complete Calendar Year Compensation History What role does the Compensation history play in 1095c reporting? Located in the Compensation record is a field called Payroll Directory (if you use Ascentis Payroll), or Payroll Code (if you don t have Ascentis Payroll). This field is used to associate the employee with the Employer Identification Number (EIN) as assigned by the IRS. Employees that don t have the Payroll Directory/Code assignment in ALL 2015 Compensation records will not receive a 1095c. What should I be concerned about? Each employee needs a full Calendar year of compensation history on this tab. If you joined Ascentis in July and only brought in the current comp record on your employees, they may not have the full year indicated. For example, if you started on Ascentis in July and only brought in the employees current comp record, the current record may have a start date of 05/01/2015. The system will also need to have access to the comp record that relates to the prior months in the calendar year in this example 01/01/ /30/2015. Accurate Compensation history is vital! Where is the Compensation History Located? The Compensation history is located under Employee Manager. Select the employee you want to audit and click the Compensation tool on the left side of the window. What is the best way to audit this? Ascentis recommends that you run a change history report to review all employees to ensure the full year is recognized within the system. Check out the related video on auditing the Compensation History to see an example of how to run an audit report. I found employees missing history records. What is the best way to fix this? Review and add in any missing compensation history records in the window for each employee. Check out the related video on auditing the Employment History to see an example of how to edit these records. Page 4

5 ACA Data Audit # 3 Accurate Payroll Directory/Payroll Code Assignment What role does the Payroll Directory/Payroll code play in 1095c reporting? The Payroll Directory or Payroll Code is used to identify which EIN the employees 1095c should be reported to. Do I have a Payroll Directory or Payroll Code? If you use Ascentis Payroll then the field will be called Payroll Directory. If you do not use Ascentis Payroll then the field will be called Payroll Code. While you can map multiple Payroll Directory/Codes to one EIN, you should not be mapping multiple EIN s to one shared Payroll Directory or Code. What should I be concerned about? Related to the topic above regarding accurate and complete Compensation History, you want to ensure that ALL compensation records related to the year 2015 calendar year have the Payroll Directory/Code field populated. Records that are missing the assignment will result in incomplete and inaccurate 1095c forms. Special warning for clients with multiple EIN s! For clients that have multiple EIN s, if you have transferred any employees between EIN s in the year, you re going to want to perform a special audit on those employees to make sure their compensation history correctly reflects the periods of times they worked under each EIN. Each time they transfer between EIN s they will need a NEW comp record created that shows the time they worked in that EIN and has the Payroll Directory/Code linked that is associated with that EIN. If you have any employees that work simultaneously in multiple EINs, you ll want their compensation records to just reflect the EIN that they were offered benefits under. Example Kathryn Smith has been in Payroll Directory EOG for a number of years. Effective 10/1/2015, Kathryn is being transferred to Payroll Directory Admin and her annual salary and all other aspects of her compensation record are staying the same. We are preparing to process Cs for tax year Even though the compensation is staying the same, Kathryn will need a new Compensation record created with a start date that reflects her transfer to the other EIN. Page 5

6 Where can I see my Payroll Directories/Codes? The master list of your Directories/Codes can be seen in Setup Manager under Setup > Payroll Directories (or Payroll Codes). For assigning the code to the employees, you will see the field within each employees Compensation record both their current record and their historical records. Go into Employee Manager, select an employee and click on the Compensation feature on the left side of the window. Click View/Change to open the record. Located on the lower right side of the window will be a drop down menu to access and assign the Directory/Code to the employee. I have a variety of types of employees in my HR database. Who needs a code? ALL employees Any non-employees (e.g. Partners who get a K1 but were on your benefits plan, retirees) If you are Self-Insured you will also need to create a profile for COBRA Dependents and make sure they have a $0 comp record with a Payroll Directory/Code assignment. Basically EVERYONE who was covered under your company s Medical Plan in the calendar year needs to be assigned a payroll directory or payroll code on a compensation record. What is the best way to audit this? Ascentis recommends that you run a change history report to review all employees to ensure the full year is recognized within the system. Check out the related video on auditing the Compensation History to see an example of how to run an audit report. I have employees with comp history records missing the Payroll Directory/Payroll Code assignment. What is the best way to fix this? You will want to review and ensure that each employee s compensation history record that either began or ended in 2015 has a Payroll Directory/Code associated with it. Check out the related video on auditing Compensation History to see examples of how to make these edits. I have employees that were transferred between Payroll Directories without creating a new compensation row. What is the best way to fix this? You may want to perform a special audit on any employees you know who transferred in the 2015 calendar year to make sure that when the transfer took place, a new line of Compensation history was created showing the start date for that transfer to the new Payroll Directory/Code (and associated EIN). Page 6

7 ACA Data Audit # 4 Dependent Social Security Numbers Why would I need to have the Dependent Social Security Numbers? If you have Self-Funded Medical plans you will need to have all dependents that are US residents entered in the system with their Social Security Number. I don t know what my employees Dependent Social Security Numbers are. How can I get this information? First tip - don t make them up! Our recommendation, open up the field in Employee Self Service and ask your employees to populate the information. Your Carriers should also have that information in which case you could manually enter it for all employees. What if I can t get the dependent Social Security numbers? Per the IRS, they expect you to be able to prove that you have attempted at least three times to request the information from the employees. Ascentis recommendation is that you document your requests for this information so you can prove the 3 attempts should you need to. Page 7

8 ACA Data Audit # 5 Complete Calendar year Benefit History What role do the Benefit Plans play in the 1095c reporting? The benefit plans are the starting point for building the rate and cost structure and then being able to enroll employees in those benefit plans which is then used to indicate on the 1095c which months the employee was enrolled in Medical coverage. What should I be concerned about? There are several things to consider: You want to make sure that all Medical plans that you offered in the year are setup within the system and have the correct rates. Special consideration if you joined Ascentis mid-year For clients that joined Ascentis mid-year, did you have a mid-year plan change? If so you want to make sure that you didn t just build the new plans at the time of starting with Ascentis but that you also built any plans that were in effect at any point in the year. Where are the Benefit plans found? The Benefit plans are built under Setup Manager > Benefit Setup Wizard. From there you can click on the Modify or View an existing Plan option to see all the plans you currently have setup. What role do the Benefit enrollments play in 1095c reporting? Any employees (or even non-employees) who were covered on your medical plans in the year need a benefit enrollment for any periods of time that they were covered during the year. These enrollment records within HR will translate into reporting of coverage on the 1095c forms. Page 8

9 What should I be concerned about? You want to make sure that every single person who had coverage on your medical plans during the year has accurate Benefit history records in the system. Even terminated employees need to have accurate enrollment history in the system. If you are Self Insured then COBRA Dependents will also need an enrollment record in the system. Special note for clients who joined Ascentis mid-year If you joined Ascentis mid-year, you may have initially only been concerned with getting the current enrollments in the system. You will want to make sure that you have gone back and built the historical enrollments for the period of time prior to joining Ascentis. Where do I complete a Benefit enrollment? Within Employee Manager you will select an employee and then click on the Benefits feature on the left. Click New at the bottom of the window and proceed to build the record on the Health tab. Check out the associated video on Benefit History to see a review of ensuring accurate enrollment history for each employee. What is the best way to audit that the enrollment history is accurate in Ascentis HR? Ascentis recommends you run a Benefit audit report out of HR and compare it to a Benefit Census from your Carrier(s). Remember, the Carriers will also be reporting to the IRS. Carriers will send the 1094(b) and 1095(b) forms. You want to make sure that you in turn will be producing a 1095(c) form for each enrolled plan member the Carrier will produce the (b) form for (e.g. your employees, K1 partners on the benefits, retirees) again, anyone enrolled in your benefit plans in the calendar year. Check out the associated ACA Benefit History video to see a review of writing a custom report to help perform these audits. What is a Carrier Census? Where can I get it from? The Carrier Census is a standard report your Carrier can provide. Your Broker should be able to help you get this. Page 9

10 What do I do if I find someone on the Carrier Census who is in HR but has no enrollment record? Enroll them in the plan. Special Enrollment Considerations (ones that might not be obvious) If Self Insured, Dependents who turned age 26 during the year and elected COBRA or the Spouse or ex- Spouse who elected COBRA without the employee must have an enrollment record in Ascentis HR. Partners or anyone else not typically tracked in Ascentis HR but who was on your medical plan with the Carriers. Union Employees See the next topic about Union employees. Multi-Employer Plan Considerations (i.e. Union Employees) What s special about Union employees? Union employees who are covered under the Unions benefit plans but who are technically your employee, need a special code (1H) to print on their 1095 form. I have union employees. How do I know if this is applicable to me? If you have Union employees working for you but who receive medical coverage through the Union (i.e. not covered on your internal company plan). What do I need to do to ensure these Union employees are properly reported? You need to build a place holder benefit plan and mark it as a Multi-Employer plan and then only enroll the Union employees in this plan. When Ascentis finds employees in this type of plan, the form will automatically produce with the required 1H code. Be sure to check out the associated ACA Benefit History video to see examples of these very same topics. Page 10

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