The previously extended deadlines for submitting reporting to the IRS as part of the ACA (Obamacare) are now quickly approaching. All the materials required by the IRS are due between March 31 and June 20, 2016. That means, if you haven’t already been working on it, you have little time left to compile and transmit the required information to the IRS. Here’s what you need to know about what will be required by way of reporting for your contingent workforce.
First and most importantly, know that contract employees are required to be included in your reporting because as far as the IRS is concerned, they are considered Full Time Equivalents (FTE). As such the common law classification rules apply to most contingent assignments. The defining characteristics being a) that the client (employer) controls the nature and timing of the work performed by the contingent resource, providing performance evaluation of completed tasks. Other defining characteristics include FTEs and contractors who work:
- 30 hours a week
- 130 hours a month
- 1560 hours a year
Independent contractors are exempt, but be sure your IC classification policies are up to date and enforced.
So, what is required to be reported and when is it due? Forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) isn’t due until May 31st if filing electronically. However, if you’re planning to file on paper, the due date is February 29th. 1095-C (Employer-Provided Health Insurance Offer and Coverage) is similarly due to the IRS by February 29, 2016 (on paper), or by March 31, 2016, if filing electronically. Note that there are fines of $100 to $250 per day for being late.
So, what must be included by way of reporting requirements? For each FTE who was engaged for one or more months during the 2015 calendar year, you will need to produce certain information about the health care coverage that was offered by the employer (or staffing vendor). Or, if applicable, it must be reported that the employer did not offer health care coverage to the employee. A majority (better than 60%) of staffing partners, including nextSource, offer full benefits to contingent workers so it is a safe bet that your staffing partners did indeed offer benefits to candidates they sourced for your program. You’ll need to verify this information for all resources working within your organization.
What can I do immediately to achieve compliance if I haven’t already prepared? A good first action would be to ensure contracts with staffing partners require at a minimum, compliance to all laws. As a best practice, the contracts should detail the requirements for healthcare coverage. On an ongoing basis, prepare to audit suppliers and require them to report monthly on such things as benefits verification and waivers. In the longer term, we recommend partnering with an MSP provider who should be able to advise on changes and updates as they become necessary. We also suggest implementing a VMS software solution to help automate and codify reporting needs. This way, the next big regulatory brouhaha won’t leave your program scrambling to achieve compliance.