As open enrollment season is upon us, now is the time to ask questions related to your company’s Affordable Care Act compliance:
• Is your company’s health insurance “affordable” according to Affordable Care Act (ACA) requirements?
• Did it meet “minimum essential coverage” requirements?
• Were all full-time employees offered the insurance?
• Were all part-time employees tracked for actual hours worked?
• How will your company prove its compliance if ever there are challenges by an employee or an audit by the IRS?
Here are a few rock-solid ways to document during open enrollment.
Documenting the Offer Meets ACA Requirements
All documentation that supports the health insurance being compliant with ACA regulations should come from the health insurance provider. The provider can demonstrate (in writing) how each benefit plan meets (or does not meet) ACA requirements.
From “minimum essential coverage” to “minimum value” to “affordable,” the health insurance provider is the “go to” source to prove these requirements. Take advantage of the resource and require written explanations of each benefit plan with details of how the plans satisfy ACA regulations. That’s what the health insurance provider is supposed to provide!
Documenting the Health Insurance Offer
All of these strategies will provide solid documentation of the insurance offer:
- Announce the offer! Secure postings in public employee areas. Take pictures even! Keep all announcements and posters filed for documentation purposes.
- Communicate to employees in a variety of ways. Send email blasts announcing the open enrollment dates and times, securing delivery confirmation as well as copies of the original email.
- Hold educational sessions that allow employees to understand the health insurance particulars for the coming year. Ensure all session attendees sign in when they arrive (this is very convincing documentation).
- Ask for department heads and directors to include “health insurance offers” as an agenda item in their meetings for discussion. Rely on them to help notify and remind employees of the dates and times for enrollment. Secure a copy of the agendas for documentation.
- Distribute health benefit packets, requiring that employees sign an acknowledgement the employee received the packet for documentation.
Once employees have been signed up during open enrollment, make sure there is a signature on file of the enrollment and benefit selections with effective dates. This will serve as documentation of selection of coverage and the dates insurance began.
Documenting Waiver of Offer
For employees who decline the offer of insurance, a signed waiver form will document the selection. Make sure the waiver includes the consequences of waiving coverage (i.e., employee cannot enroll in employer insurance until next open enrollment, employee may not qualify for premium tax credit, etc.). Secure a copy for the employee’s benefit file and make sure the employee gets a copy.
Documenting ‘Actual Hours Worked’ for PTEs and VHEs
During an IRS ACA audit, the employer has the burden of proving the employer offered minimum essential coverage to 95 percent of its full-time employees. Unless the employer concedes all of its employees are full-time, this can be challenging to prove that some or all of the employees should not be counted as full-time. This often involves conducting the look-back measurement method sanctioned by the IRS.
The employer will also need to show it made the offers of coverage to all applicable employees in a timely manner. Unless the employer concedes that each applicable employee should have been offered coverage for every month of the reporting year, the employer must prove that, for the months the applicable employee was not offered coverage, there was an exclusion under the IRS regulations. This could include the dates of hiring employees and the various limited non-assessment periods.
The employer should consider using a digital platform that documents full-time employee status tracking and all of the various human resources and payroll data relevant to the offer of coverage, including hire and rehire dates, termination dates, leaves of absences, etc.
Use open enrollment to be prepared with appropriate ACA documentation!
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