1094-c & 1095-C Reporting for Employers with 50 -99 Employees

Disclaimer:  Datatech does not provide legal advice.  You should consult your accountant and/or attorney to determine you legal responsibility.

In reviewing the instructions for the 1094-C & 1095-C forms it has come to our attention that while the ACA Transitional Relief provided for a delay in the penalties under the Employer-Shared Responsibility Tax for employers with 50 -99 employees (therefore employers didn’t need to provide insurance in 2015), employers are still required to file the new IRS forms.

On the 1094-C form, reported to the IRS, a code will indicate that you are claiming Transitional Relief for “for ALEs with Fewer Than 100 Full-Time Employees, Including Full-Time Equivalent (50-99 Transition Relief)”.

Employers will also have to send the 1095-C forms to employees that worked full-time in one or more months.  The reason for this is that the employee needs the 1095-C form to prove they did not receive an offer of coverage from their employer and thus may be eligible for the premium tax credit.

You can download pdf’s of the forms and instructions from the IRS website from the following links:

https://www.irs.gov/pub/irs-prior/i109495c–2015.pdf

https://www.irs.gov/pub/irs-pdf/f1094c.pdf

https://www.irs.gov/pub/irs-pdf/f1095c.pdf

Reminder: These forms are only generated through our HRMS (Human Resource Management software).  If you don’t want to create the forms manually, you may want to consider purchasing the module soon and get set up in December, so you’ll be ready to print the forms in January.

 

 

How Many 1095-C Forms Do I Need?

Per the 1094 & 1095 instructions you need to provide a 1095-C form for “full-time employees for one or more months of the calendar year.”

This means if an employee works full time for one month they will need a 1095-C.

We have not added a count generator for this yet, but you can use the following options to get a close estimate:

1. Use the Count Employees with YTD Wages option (Payroll > Year End Tax Reporting menu) to get your W-2 count.  When running this before closing the end of the year, use the Employee Count File option.  Remember, to add in any additional W-2’s for new hires, reprints and corrections.

2. Run the Hours Analysis Report (Payroll > Reports menu) to determine the number of employees that never worked full time in any given month.  Enter the date range for the year and select “No Full Time” under the Print option.

If you are using the pay period method for determining eligibility enter 120 in the “Min. Hours, Full Time.”  If you are using calendar days worked, leave the minimum hours at 130.

Look for the Total Employee Count at the End of the Report:

Caution: The Hours Analysis does not automatically add in hours for salary employees if you don’t use PW Hours to enter them. Subtract the number of salary employees from the total Non Full Time Count to get a more accurate estimate.

3. Subtract the Non Full Time from the W-2 Count, factoring in any extra forms needed.

Example:

Take the W-2 employee count of 2,351 and round up to 2,500 to allow for reprints and corrections.  Then, take the Non-Full Time Count of 1135 and round down to 1,000 to allow for some that may end up full time in November and December.  2,500 – 1,000 would give us 1,500 1095-C forms needed.

Caution:  This is just an example.  Depending on your past history, the number of employees that may be hired before the end of the year, extra forms needed for reprints, etc…, you may have to take other factors into consideration.  We recommend over estimating the number of forms needed to ensure you have enough.

ACA Transitional Reinsurance Fee information

Recently we had a customer ask about this fee after it was brought to their attention by their TPA.  Since this a fee on self-funded plans, it has the potential to affect many of our customers who are offering these plans to their employees.  We found several helpful links via Google with more details:

The Transitional Reinsurance Program – Centers for Medicare & Medicaid Services

Reinsurance Fact Sheet – Cigna

International Medical Administrators

If you have a self-funded plan and you are not sure whether you need to pay this fee, contact your insurance broker/agent/TPA to find out.  If you do need to pay this fee, we recommend using the “snapshot” method as described in the Cigna link to determine the number of covered lives each month.  A new report has been added to the HR to determine the number of covered lives per month for each of your health insurance plans.  This report is based on the enrollment dates recorded on your health benefit records.

We recommend that you start with this report but confirm the numbers on it with your actual bills for each month from your insurance company that should list how many covered lives there are for each month.  (If your detail bills are readily available, your insurance carrier might also be able to provide you with a report with the monthly enrollment counts.)

If there is a difference between the counts from the report and the counts from your bills, we would recommend using the numbers from your bills.  A review of your health benefit records may be needed to make sure you have an accurate accounting of who was insured each month, and that the coverage reported on the 1095-C will be accurate.  An update will be available soon that includes more options for importing detail insurance bills in Excel format as an aide to reconciling coverage records with billing records.

The latest version of the HR program can be downloaded using the Check for Updates option on the Tools menu.  Go to Health Insurance->Reports->Insurance Enrollment Count Report to run the new report that will give you the covered lives per month information.

AB1513 Legislation Changes Average Pay Calculations for Rest and Recovery Time

On October 10th, 2015, Governor Brown signed into law legislation that re-writes the definition and rules governing payment of hourly wages for break/rest periods and “non-productive” time.  This post will cover how these changes will be handled within our software.  Pay attention to the terminology used in this article since we are trying to use terminology to match the law.  This may be different than what we have used in the past.

Rest and Recovery vs. Non-Productive

There is a distinction in the verbiage of the law between rest and recovery periods and non-productive time.  In the past we may have generally referred to all of this time as non-productive.  We will no longer refer to rest and recovery periods as non-productive.  Non-productive pay is separate from non-activity during piece-rate work.  Examples of non-productive time would be meetings, exercise, travel time, etc.

Separate wage types or jobs need to be defined to distinguish between rest and recovery pay versus other types of non-productive pay.  If you have already been using a wage type set up as “NP”, you may want to keep that to have all prior history and future rest and recovery wages show up together.  You can change the description on the wage type to indicate rest and recovery wages.

Since non-productive time is paid at an hourly rate, it is not necessary to set up a separate wage type for those types of work.  However, many of our customers are doing this to track time separately.  For example, you could set up a wage type “EX” for exercise, “TT” for travel-time, etc.

Changes to the Average Rate of Pay Calculation for Rest and Recovery

One of the biggest changes is the calculation of the average pay rate applied to rest and recovery periods.

Current Method:  The Average Piece Rate Report currently calculates the average hourly rate on only piecework wages.  This is based on the guidance provided by the DLSE.

New Method:  The legislation states that the average hourly rate used for rest and recovery pay should be computed by dividing the total wages for the week, (exclusive of the rest and recovery wages and any premium overtime wages) divided by the total number of hours worked (exclusive of the rest and recovery time).

This change will take place on January 1st, 2016 and will actually be a benefit toward the employer if they pay regular wages and piecework in the same period.  This change will benefit employers if the average hourly regular pay rate is less than the average hourly piecework rate.  We will have the change to the Average Piece Rate Report (may be re-named since it’s not average piece rate any longer) prior to this time and have separate calculation methods available due to other States not using the same method as California.  Be sure to read all direction when the update is released with this new option.

We are expecting guidance to be issued by the DLSE on this law and programming changes may be delayed, depending on when this information is received.

“Safe Harbor” From Lawsuits for Non-Payment of Rest and Recovery Periods

The new legislation also provides some relief from lawsuits filed on or after March 1, 2014 until January 1, 2021 for employers that comply with the requirements of the law no later than December 31, 2016.  This includes restitution made to employees for rest and recovery periods during piece-rate activity starting from July 1, 2012 through December 31, 2015.  Here are the two methods available for computing these payments as stated in the AB1513 legislation:

(1) The employer makes payments to each of its employees, except as specified in paragraph (2), for previously uncompensated or undercompensated rest and recovery periods and other nonproductive time from July 1, 2012, to December 31, 2015, inclusive, using one of the formulas specified in subparagraph (A) or (B):

(A) The employer determines and pays the actual sums due together with accrued interest calculated in accordance with subdivision (c) of Section 98.1.

(B) The employer pays each employee an amount equal to 4 percent of that employee’s gross earnings in pay periods in which any work was performed on a piece-rate basis from July 1, 2012, to December 31, 2015, inclusive, less amounts already paid to that employee, separate from piece-rate compensation, for rest and recovery periods and other nonproductive time during the same time, provided that the amount by which the payment to each employee may be reduced for amounts already paid for other nonproductive time shall not exceed 1 percent of the employee’s gross earnings during the same time.

We would like to get feedback from our customers as to which method they will be using.  Please feel free to comment below to let us know what you are planning.  We have not yet decided if we will be programming options for both of these methods.  Option “A” seems most problematic because rules would need to be defined for how many breaks per block of hours.  If data is not entered by day and perfectly, there could be some data that cannot be analyzed perfectly.  Option “B” seems the most straightforward because you are paying a percentage of wages during periods the employees worked in piece-rate activity.  This amount can be reduced up to 1% if you have other activity during those periods where they were paid by the hour and included breaks.  With this method there is no calculation of the average pay rate, number of breaks, etc.  Four percent would constitute two breaks a day, so you are probably not going to be paying out much more through this method unless you have a higher mix of hourly and piecework within each pay period.  However, in that case you have the option of reducing the percentage, up to one percent.

Whatever programming we do, it will be offered after the beginning of 2016.  Also, since this is a specialized option that will only be used once, there will most likely be a small fee involved.  Any data analysis requests for our assistance for purposes of determining rest and recovery payments is also billable time.  We can give guidance on what reports can be run to help, but any extended time analyzing data would go beyond the software contract support agreement.

If you plan to make these restitutions this year and have not done so already, please keep in mind the extra employee count you will have when ordering your W2’s.

We encourage each customer to review the new law and seek counsel on how to implement new procedures and pay past break time restitution.  Nothing in the article should be interpreted as or relied on as legal advice.  Consult a qualified attorney about any matter of legal significance to you.

AB1513 Legistation Link

“Raw file command error” message on program startup

Several customers have reported that they are getting this error message on program startup.  This error indicates that the program is having trouble getting the federal tax rates for 2016.  This can safely be ignored because the 2016 tax rates have not been released yet.

You can avoid this error by turning off the automatic check for updates to tax rates.  This setting is found under Tools->Program Setup->Payroll->Control Numbers.  Uncheck the box at the top right labeled “Automatically check for tax rate updates”.  The box can be checked again after you have updated to the latest version of the program.

The latest update (7.52.1311) for The Farmer’s Office and The Labor Contractor’s Office includes a correction for this error message.  You can download this version using the Tools->Check for Updates option.  An update for The Shipper’s Office and The Broker’s Office will be posted shortly.  If you are using another Datatech program that does not have an update available using the Check for Updates option, contact Datatech customer support.