Prepare for the Increase in Audits
The Department of Labor has made it clear — they are going to increase PPACA audits this year. Compliance is one of an employer’s greatest fears, and to make things even more complicated, there are multiple government entities auditing small businesses including the DOL and the IRS. So how can you make sure your business is prepared?
First, make sure you are clear on compliance requirements
The Starr Group is your compliance resource. There are several requirements you need to be aware of this year including:
- For 2016, the employer shared responsibility penalty of $2,000 is increased to $2,160 and the $3,000 is now $3,240
- Despite the deadline being extended, businesses with over 50 full-time equivalent employees should be filing and distributing their 1094-C and 1095-Cs
- Business owners should be aware of and planning for the Cadillac Tax
Second, make sure you are keeping records
In addition to actually complying, you should be keeping clear records of this compliance. If you are using a benefits administration platform, this should be fairly easy. Records that should be kept include:
- Every step taken to comply with ACA requirements - this includes plan participation information, communications, and contracts
- All notices sent to employees
- Records of hours worked (for calculating FTE)
- All waivers signed by employees
- Copies of 1094-C / 1095-Cs
In short, you should keep every document that demonstrates your efforts to be in compliance. For example, the IRS is requiring a “good faith effort” for 1095-C reporting, and while the definition is vague, keeping all records will help your chances if an audit does occur.
Third, know your compliance options
When it comes to ACA compliance, many employers will be looking to find a solution to stay compliant. In fact, when surveyed 94 percent of employers want their brokers to provide regulatory and legislative updates. Some brokers provide benefit administration software to their clients and can easily ensure compliance while simplifying processes like 1094-C/1095-C requirements.
Many employers are already reporting issues with 1095-C reporting solutions, specifically with payroll providers. This is expected to be a strong driver for employers to want to change solutions to avoid this in future years. Selecting a benefits administration platform with native 1095-C reporting included is the best, easy-to-use solution for businesses.
With all of the new requirements, it’s expected regulators will want to work with employers to maintain compliance. However, increasing compliance efforts now can help prepare your business if you happen to be chosen for a random audit. It’s being reported that the DOL has a plan to generate $1,172,108,000 in compliance enforcement results, so it is not something to be taken lightly.
President’s Note: The Starr Group is aware of the exposures created by PPACA and one of them deals with the complying with ERISA requirements. The bottom line is: ALL businesses MUST HAVE a comprehensive WRAP document. We find very, very few businesses have this critical document. Without it, a company is left open to exorbitant fines and fees.
While it is conceivable Fiduciary Liability coverage may give a token amount for fines and penalties up to $100,000 — MAYBE—The Starr Group can prepare a WRAP document for you, keep your company compliant, and avoid the headache and hit to your pocketbook altogether. —T.S.