ACA ready in GP: Managing the latest IRS gotchas

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On August 28, 2014, the IRS issued preliminary instructions for Forms 1095-C and 1094-C, the two forms that, according to the employer mandate of the Affordable Care Act (ACA), many companies will need to begin filing annually – starting in January 2016 – to document the availability of health coverage to their employees.

These instructions brought clarity to the ACA draft forms released July 24, 2014. Although the instructions themselves are also technically in draft status, that designation is more a matter of the formality of pending approval by the Office of Management and Budget.

So with the foundation set as it can be now for such ACA reporting, this latest release from the IRS packs both good news and bad news for employers getting ready to compile information needed to submit these forms.

Before we look at the relevance of this news, let's remember that unlike the information reported every January on Form W-2 (summary data from the preceding year), information on Forms 1095-C and 1094-C will be derived from month-to-month tracking of payroll data in the preceding year. For most employers, their payroll-tracking system must be accordingly adapted by January 1, 2015.

The bad news – and why you need to know these IRS gotchas now

The first (recent) gotcha:

Form 1095-C must be generated for every employee who was full-time in any month of the previous calendar year.

ACAreadyGP_IRSgotchaWhat this means:

Even if an employee doesn't meet ACA-defined full-time status for a designated measurement period, he or she must still be given Form 1095-C in January 2016 if they worked at least 130 hours in any one month of 2015.

Another gotcha:

Regardless of employee status (full-time vs. variable hour), if an employee is enrolled in a self-funded health care plan offered by his or her employer, they must receive a Form 1095-C.

Now, the good news – maybe

If an employer isn't offering self-funded health care coverage, they don't need to capture information on dependents in order to meet ACA-mandated IRS reporting requirements.

The employer will still have to provide information on the type of coverage offered and on whether coverage was offered for spouses and dependents.

If an employer is offering self-funded health care coverage, details on dependent coverage must be submitted. Those details include the name, relationship to employee, and SSN or DOB of each dependent covered.

If you are using Microsoft Dynamics GP, the HR module of your ERP system can capture this information because those details are tied to an employee’s Payroll record. You wouldn’t have to fully implement the HR module to access the needed information on dependents.

Starting with GP 2013, the HR module is part of the Payroll suite of Microsoft Dynamics GP.

Added help as you prep for filing with the IRS

In late September 2014, we will be releasing Version 2.1 of Sypnio ACA Reporting, our core application for transforming the payroll processing functionality of Microsoft Dynamics GP into an ACA tracking and ACA compliance vehicle. Among the updates this version comprises will be a feature called ACA Plan Setup.

Click to enlarge, to see how the GP Payroll add-on called Sypnio ACA Reporting will help GP Payroll users cover all the areas needed to produce ACA-mandated Form 1095-C right from their ERP system.

Options in ACA Plan Setup will provide all the checkpoints for what needs to be maintained in Microsoft Dynamics GP Payroll in order to generate the proper indicator codes for the information needed to complete Form 1095-C.

For every insurance plan that an employer offers, a setup screen will be available to capture the information needed for the IRS annual submission.

Sypnio’s software will generate both Form 1095-C and its transmittal, Form 1094-C, from Microsoft Dynamics GP without the need for a third-party interface.

In addition to producing Form 1095-C for each employee, Sypnio ACA Reporting will also provide the required IRS e-file capability for Form 1094-C.

Bottom line: More gotchas that would be challenging to address without a GP system enhancement

With the most recent ACA directives released by the IRS, the fine lens for tracking an employee’s hours of service got all the finer.

Exacting as that ACA-mandated lens may be, our cost-effective add-on software still will transform the Payroll module of Microsoft Dynamics GP into a vehicle for ACA tracking and reporting compliance.

Our sole reason for being in business is to future-proof ACA compliance of companies processing payroll with Microsoft Dynamics GP (Great Plains). The level of complexity in the yet-to-be-tempered employer mandate of the Affordable Care Act is too high to rely on managing ACA risk with manual workarounds.

To see how seamlessly our fully integrated software works in Great Plains:

  • Sign up here for one of our weekly demos, at 10:30 a.m. Central every Thursday morning
  • Email us to schedule a demo just for you and your team at a time that works for you.


By Helen Karakoudas | Sypnio Software

2 thoughts on “ACA ready in GP: Managing the latest IRS gotchas”

  1. Melissa,

    Sypnio ACA Reporting will alert you to the extent of your potential penalty liability because, by saying now that you will not offer employees health insurance and by following through on this statement after the penalty-assessment period kicks in, you will be telling the IRS that you’re choosing to pay rather than play.

    And documentation of that decision will comprise some risk. Here's what you need to know about such ACA risk:

    When exactly will you be making your “pay” statement to the IRS?
    • In the first quarter of 2016, if you have 100 or more full-time employees or full-time equivalents.
    • In the first quarter of 2017, if you have 50 or more full-time employees or full-time equivalents.

    How will you be making your “pay” statement to the IRS?
    • Via Form 1094-C, the transmittal to the IRS of Form 1095-C, the new yearly staple that the ACA requires be distributed every January to each employee who worked 130 hours in any month of the previous year, in order to document whether employer-provided health care coverage was offered.
    • There will be a code on Form 1095-C for noting that such coverage was not offered to an employee eligible for it.
    Sypnio ACA Reporting will not formats your payroll data so that you can generate these forms, it focuses on eligibility and affordability – the two foundations for employer compliance with the ACA-mandated IRS reporting requirements. If you have chosen not to provide health care coverage, you still must report – for penalty-assessment purposes – on which months an employee was deemed to be full-time according to the ACA definition of full-time.

    What are the penalties?

    Failure to generate Form 1095-C will result in a $100 penalty for every form that should have been distributed but wasn’t, with the maximum for this penalty being $1.5 million.

    If you do not provide insurance, Form 1095-C will annotate that on a month-by-month basis. For employers who choose not to provide insurance and are deemed to be applicable large employers, they may be subject to a fine of $2,000 per full-time employee – excluding the first 30 employees (for 2015, the exclusion is 80).

    The shared responsibility penalty is on a per-month basis, meaning that an employer may be assessed 1/12th of the $2,000 for each month that no coverage is offered to an employee who was deemed full-time (130 hours) in a month.

    A part of the complex Affordable Care Act centers on funding mechanisms built into it. According to the latest projections from the Office of Management and Budget, penalties collected from enforcement of the employer mandate will generate about $14 billion per year through 2023.

    Keep in mind that payment of these penalties cannot be taken off as an expense in calculating tax liabilities.

    The Affordable Care Act empowers the IRS to be its enforcer. The IRS knows how to penalize. The IRS knows how to collect.

    I hope this background brings some perspective to your particular ACA exposure. If you have any other questions, please let us know.

    Helen Karakoudas
    Sypnio Software

  2. We do not provide medical insurance and will not provide it - ever. So my question to you, is what would this software be used for in terms of reporting? Thank you-

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