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Data Collection Requirement for Employers Under the ACA

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Data collection for the Affordable Care Act (ACA) is one of the most "hands-on" requirements mandated by the ACA, which requires employers to collect data about their workforce and insurance coverage and report it to their employees and the IRS.

The Brass Tacks on Data Collection for the ACA

Internal Revenue Code § 6056 requires "large employers" to furnish statements to each individual who was a full-time employee for at least one month during the calendar year, to disclose whether each such full-time employee and his or her spouse and/or dependents were offered health coverage and, if so, to report the lowest cost of individual coverage available to the employee. In addition, the employer must report similar information with respect to part-time employees who are offered and who accept coverage. Copies of those statements, also known as Forms 1095-C, must also be transmitted to the IRS, along with certain transmittal information. Each Form 1095-C must include the following eight details:

  1. The name, address and employer ID number (EIN) of the applicable large employer member.
  2. The name and telephone number of the applicable large employer's contact person.
  3. The calendar year for which the information is being reported.
  4. A certification whether the applicable large employer member offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, by calendar month.
  5. The months during the calendar year for which coverage under the plan was available.
  6. Each full-time employee's share of the lowest cost monthly premium (self-only) for coverage, by calendar month.
  7. The number of full-time employees for each month during the calendar year.
  8. The name, address and taxpayer identification number of each full-time employee during the calendar year, and the months, if any, during which the employee was covered under the plan.

For 2015, statements to the employees should have been provided by March 31, 2016, with copies to the IRS together with a transmittal form by May 31, 2016 if filed on paper (June 30, 2016 if filed electronically).

ACA Pitfalls and Potholes

Central to this process is determining the number of full-time employees for each month during the calendar year. (See number 7 above.) There are two measurement methods for determining whether an employee has sufficient hours of service to be a full-time employee: the Monthly Measurement Method and the Look-Back Measurement Method.

Under the Monthly Measurement Method, an employer determines each employee's status as a full-time employee by counting the employee's hours of service for each month. Under the Look-Back Measurement Method, an employer may determine the status of an employee as a full-time employee during a future period (the stability period) based upon the hours of service of the employee in a prior period (the measurement period).

An employer must use the same method for all employees in the same category. The categories of employees that may be treated differently are as follows:

  1. Salaried employees and hourly employees.
  2. Employees whose primary places of employment are in different states.
  3. Collectively bargained employees and non-collectively bargained employees.
  4. Each group of collectively bargained employees covered by a separate collective bargaining agreement.

Properly collecting this data is of utmost importance, but equally vital is the protection of that data once it has been gathered. Before you even begin the process, it's critical to loop in payroll, benefits and leaves to verify that all possible data protection systems are scrutinized, tested and properly deployed.

Although data collection for the ACA will require ample forethought and manpower to get the job done, if you have a firm understanding of the requirements and take pains to protect your data, your organization should be able to make the process as painless and efficient as possible.