Open Up the Silos for Optimum Compliance

With implementation of the ACA, many brokers and employers have had a laser focus on understanding the requirements necessary to comply with the law. And, rightly so! As such, employers have adopted lookback measurement periods, identified variable hour employees, not to mention a myriad of terms and constructs.

 Employers who have filed their 1094-C and 1095-C forms with the IRS are now receiving error codes as a result of their filings. Here’s what one employer reported as an IRS error message:

Filing accepted notice of ACA reporting with error: AIRTN name/SS did not match IRS database.

This “ IRS-speak” meant that there was no match in the IRS database for the social security number that the employer used for an employee. As a result, the employer must correct the record or somehow take action to satisfy the error message.

In this specific example, as a first step, the employer should investigate whether there was a transposed number or some other typographical-type of error in reporting the information. Then, the employer can take the necessary steps to address the reporting error.

 The next step that employers may not take – but should – can occur if the employer treats ACA compliance separate from other HR functions – as if ACA compliance was in its own “silo.” That step is to consider other uses of the information outside of the “ACA silo.”

In the case of social security numbers, a review of whether the W-2 was accurate or whether the I-9 form was accurate would be advised. Reviewing and correcting this social security number must be done within the restrictions employers face regarding documentation of this kind.

Actions could include instructing the employee to contact the Social Security Administration to correct the number error. Correcting the error throughout the employer’s entire environment may help avoid other errors in information that rely on this number or negative findings should the record by reviewed as a part of another audit or investigation.

The “ACA silo” effect is also seen with the definition and identification of variable hour employees. As a recap, a variable hour employee as defined in Notice 2012-58 is:

“An employee is a variable hour employee if, based on the facts and circumstances at the date the employee begins providing services to the employer (the start date), it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week.”

If employers are considering employees to be variable hour employees, then this status should be reflected in job descriptions, employment applications, employee handbooks and Summary Plan Descriptions – any where that employment or eligibility is addressed.

The list of agencies enforcing the ACA covers the gamut of employer-facing agencies and includes IRS, HHS, DOL, CMS and EEOC, to “alphabetically name” a few. Notably, the DOL and the IRS have a formal agreement to share information.

In preparation for the audits that will surely arise out of the ACA and the newly completed reporting, employers can expect that other aspects of compliance will surely surface. By breaking down internal barriers – getting rid of the silos – any audits or compliance reviews may be more readily dispatched.