the franchise's guide to aca hr technology

24 Pages·2015·0.28 MB·English

THE AFFORDABLE CARE ACT
THE FRANCHISE’S GUIDE TO
ACA HR TECHNOLOGY
Paycom Tips for a Healthy Compliance Strategy
1 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
INTRODUCTION
For the past few years, franchise Paycom provides franchises with the
organizations and franchisees alike technology to simplify their human
have invested a substantial amount capital management processes with tools
of resources into understanding the that ease ACA compliance burdens,
Affordable Care Act (ACA) and its effects mitigate risks and exposure to penalties,
on their business. Under the federal and more effectively manage labor
legislation, business owners face a variety costs. HR technology is key to a healthy
of new compliance issues impacting compliance strategy, and with one
health benefits, administrative processes, database of record for such processes
reporting responsibilities and employee as benefits administration, time and
labor management,
document and task
management and
HR TECHNOLOGY IS
payroll, Paycom offers
KEY TO A HEALTHY a unique advantage in
communicating with
COMPLIANCE STRATEGY employees and meeting
the tracking and
reporting requirements
critical to complying
staffing. Many of the weightiest ACA with the ACA, including the submission
regulations are already in effect, and the of Internal Revenue Service (IRS) Forms
question franchise owners should now be 1094- and 1095-B and C.
asking themselves is, “How am I going
to comply and stay compliant in the This guide is designed to provide a brief
future?” overview of the ACA requirements
currently facing franchisees and how
This is the time to assess not only your Paycom’s technology can be used to
health care programs, but also what your facilitate compliance.
strategy will be for meeting the daunting
tracking and reporting requirements of
this health care reform legislation.
2 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
© 2015, Paycom. All rights reserved. INTELLECTUAL PROPERTY DISCLAIMER: THIS
GUIDE IS FOR INFORMATIONAL PURPOSES ONLY AND IS PROVIDED “AS IS” WITH NO
WARRANTIES WHATSOEVER INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR ANY PARTICULAR PURPOSE, OR ANY WARRANTY OTHERWISE ARISING
OUT OF ANY PROPOSAL, SPECIFICATION, OR SAMPLE. NO LICENSE, EXPRESS OR
IMPLIED, TO ANY INTELLECTUAL PROPERTY RIGHTS IS GRANTED OR INTENDED HEREBY.
This guide is protected by copyright law. Individuals may reproduce and distribute this
guide for individual, non-commercial use. DISCLAIMER: The content of this guide is
intended to keep interested parties informed of legal and industry developments for
educational purposes only. It is not intended as legal opinion or tax advice and should not
be regarded as a substitute for legal or tax advice. Product or company names mentioned
herein may be the trademarks of their respective owners.
Revised Jan. 30, 2015.
3 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
THE ACA HR TECHNOLOGY
GUIDE FOR FRANCHISES
Determining If You Are a Large Employer as Defined by the ACA ........................ 5
Shared Responsibility Requirements for Large Employers ..................................... 9
Forms 1094- and 1095-B and C ........................................................................ 13
Maximum Enrollment Waiting Period ................................................................ 15
Automatic Enrollment Requirements ................................................................. 16
Exchange Notifications ...................................................................................... 18
Summary of Benefits and Coverage .................................................................. 20
Reporting Total Coverage Costs on Form W-2 ................................................... 20
FSA Annual Limits ............................................................................................. 20
Dependent Care Coverage ................................................................................ 21
Additional Medicare Tax Withholding ................................................................ 21
4 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
PAYCOM AND ACA COMPLIANCE
Determining If Your Are a Large
Employer as Defined by the ACA
Like all employers, one of the heaviest Determining the full- or part-time status
burdens franchises face under the of employees sounds simple enough,
ACA is accurately tracking the status but as you probably know very well by
of employees. Beginning in 2015, your now, it actually can be very complex if
preceding year’s full-time employee and you’re a medium- to large-sized business,
full-time-equivalent employee count especially if you have a variable-hour
determines whether or not you are a workforce, experience a lot of turnover or
large employer. Under the ACA, large have multiple locations.
employers may be subject to penalties
regarding employer-sponsored
health insurance. According to
80 percent of respondents said
the ACA, large employers are
the most difficult FMLA-related
defined as those with more
than 50 full-time employees or
activity was tracking intermittent
full-time-equivalent employees
leave or leave that is taken in
(during the preceding calendar
year). separate blocks of time
Full-time employees are those
working 30 or more hours per
week or 130 hours in a calendar month, When tracking employee hours, business
and exclude seasonal employees who owners are required to include any hours
work less than 120 days during the year. where employees are entitled to payment
The hours worked by part-time employees in their calculations. This includes paid
are included in the calculation of a large leave like vacation, holiday hours and sick
employer on a monthly basis by taking time. But it also includes “special” unpaid
their total number of monthly hours leave, including jury duty, military duty
worked divided by 120. and other absences like those protected
5 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
under the Family and Medical Leave Act ACA rules also require standard
(FMLA). measurement periods or look-back
periods between three to 12 months for
Unfortunately, employee leave has been employers to determine if new, variable-
notoriously difficult to track for some hour employees are part-time or full-time.
employers. In fact, in a study of HR Stability periods are subsequent to the
professionals by the Society of Human standard measurement period and can be
Resource Management (SHRM), 80 no shorter in duration. Stability periods
percent of respondents said the most must also include at least six consecutive
difficult FMLA-related activity was calendar months where the employee
tracking intermittent leave or leave that would be treated as a full-time employee.
is taken in separate blocks of time for The administrative period is the actual
a single FMLA qualifying reason.1 This time of open enrollment and cannot
includes leave for medical appointments, exceed 90 days. The initial period is
for example, or prenatal examinations. for new employees not considered full-
Part of keeping your business compliant time and tracks their time for three to 12
will be ensuring you can track special months to determine full- or part-time
unpaid leave accurately and consistently. status.
Having inaccurate data or multiple data
sources creates risk.
6 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
Paycom’s Technology for Determining
If You Are a Large Employer
Paycom’s robust ACA Dashboard, Payroll, employees working fewer than 130 hours
Time and Attendance and Report Center in a month.
tools provide franchise owners complete
visibility into hours worked to help verify With Paycom’s Report Center, you also can
their employees’ full- or part-time status determine the best standard measurement
and the best measurement period for period for your business by generating
the business in determining if it is a large these reports across four different
employer.
The head count portion of the
“ Reporting requirements are changing, and
dashboard allows employers to
to avoid unnecessary financial repercussions,
see what percentage of their
it is important that you review the payroll
full-time employees is offered
insurance. technology you are using. Reports need to
measure full-time and part-time employees,
With the dashboard, employers
as well as a number of other data points,
also can use the status tracker
so businesses can accurately provide
feature to monitor individual
information to the IRS.”
employees’ status, employees
approaching full-time status and
new hires going through their – Andria Herr and Joe Mowery
initial measurement period. Franchising World2
In addition to the ACA
Dashboard, Paycom allows you
to report across a specified date range on date ranges. You can use this report to
the employees who have worked greater determine the employees’ average amount
or equal to a specified number of hours, of hours worked each month under the
to get a list and total count of your full- different date scenarios, allowing you to
time employees. You can use the “less identify the time period with the fewest full-
than” filter to determine the part-time time-equivalent employees.
7 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
With Paycom’s Time and Attendance
feature, you can set a threshold for
hours worked during a week, e.g. 30,
and report on employees approaching
that threshold. You also can filter by
a “difference less than” value such as
eight to see only the employees who
are within eight hours of the threshold.
This report can be generated over a
multiple-week date range and will
show a week-by-week snapshot of the
employees approaching the threshold.
This information also is displayed in your
ACA Dashboard.
Paycom’s Time and Attendance tool
provides a “Labor Analysis/Overtime
Report” to determine the number of full-
time employees by listing those whose
time cards show a greater or less than
specified number of hours worked.
Paycom reports can be exported to
Microsoft Excel, text, and CSV files.
8 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
SHARED RESPONSIBILITY REQUIREMENTS
FOR LARGE EMPLOYERS
Employers with 50 or more full-time
employees (or full-time-equivalent
Learn More: The Cadillac Tax
employees as defined by the ACA) qualify
as large employers and are required
While it’s important to ensure coverage is
to provide affordable and adequate
affordable, employers also are waiting to learn
insurance coverage to employees or more about the so-called “Cadillac tax” set to take
face possible penalties. Franchises with effect in 2018. The Cadillac tax is an excise that will
levy a 40 percent tax on providers offering benefits
fewer than 100 full-time employees – but
that are deemed too generous. The tax will be
levied on health plans that exceed annual limits of
$10,200 for an individual and $27,500 for a family.
50 percent of organizations
The premise behind the tax is to bring down
surveyed indicated that they
overall health costs by making employers and their
increased employee contributions
personnel more cost-conscious. By having consumers
to health care costs in 2014
take on more of the financial burden through higher
deductibles and out-of-pocket expenses, proponents
of the Cadillac tax believe consumers will avoid
more than 50 – will not be subject to needless and costly procedures, thereby making care
more affordable for the overall population.
penalties until 2016. This change is part
of the transitional relief, giving employers
In 2013, the average employer-sponsored plan for
who fall into this category more time to
individuals cost $5,884 and the average family
comply in full with the ACA employer plan cost $16,351. Experts estimate as much as 60
mandate. However, those employing 100 percent of employer plans will exceed the individual
and family limit by 2018 if steps are not taken to
or more full-time workers are already
reduce plans prior to that time. Many organizations
subject to the coverage rules.
are taking action now to prevent sticker shock for
employees in the future. In fact, the Society for
Insurance is considered inadequate if Human Resource Management recently reported
it pays less than 60 percent of covered that 50 percent of organizations surveyed indicated
that they increased employee contributions to
health care expenses and unaffordable
health care costs in 2014, and 25 percent said they
if employees have to pay more than 9.5
planned to increase employees’ share in 2015 to
percent of their household income for
minimize their cost increases. 3
single-person coverage.
9 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY
Because employers may not have access If you do not offer insurance to your
to information about their employees’ full-time employees and even one of
total household income, the IRS has them elects to buy coverage on a federal
provided a safe harbor rule, under or state exchange, you could pay a
which employers will meet the insurance penalty of up to $2,000 a year per full-
affordability obligation of the shared time employee (not counting the first 30
responsibility requirement, provided that employees).
the cost of the employee’s insurance is
less than 9.5 percent of the employee’s If you do offer health insurance to your
Form W-2 Box 1 income, rate of pay or full-time employees, but the plan doesn’t
the federal poverty level. cover 60 percent of covered health costs
and/or any employee must
pay more than 9.5 percent
“ Administration work associated with of their household income
for single coverage (based
plan offerings is sometimes a stretch
on any of the safe harbor
for individual franchisees. Business
provisions), you could be
owners should realistically evaluate
fined an annual penalty of
administrative support to determine
up to $3,000 per full-time
whether the work required to offer a employee, or $2,000 per
plan can be absorbed by existing staff. total number of full-time
employees (not counting
Sloppy administration may actually
the first 30 employees),
create an unforeseen liability for the
whichever is less. Under
organization.”
either scenario, in order
to go to an exchange,
– Andria Herr and Joe Mowery the employee must make
Franchising World4 between 100 and 400
percent of the federal
poverty level, which
currently stands at $11,770 for a single-
person household.5
10 | PAYCOM THE FRANCHISE’S GUIDE TO ACA HR TECHNOLOGY