Obamacare Data Collection: Essential Elements of Building 1095-C Returns

What data do you have to collect for Obamacare 1095-C reporting? Sounds like a simple question right? On the surface that would appear to be the case, however like anything regulatory – the devil is always in the details. Depending on the nature of your business, the types of coverage you’re offering, and the makeup of your workforce, the type of data you may need to collect could vary significantly.

Before we get started, let’s take a quick peek at who actually needs to be collecting data and why. The need to collect data is based on the provisions issued under tax code sections 6055 and 6056. Within these tax codes we find the requirements stating that any employer with 50 or more full-time equivalents must begin reporting to individuals beginning January 2016, and to the IRS in March of 2016, using forms 1094-c and 1095-c. If you missed our last blog about filing a 1095-C form I recommend you read “Everything You Need to Know about Affordable Care Act 1095-C Filing”.

Currently there’s a lot of confusion around who needs to report, what needs to be reported, and when reporting must be completed. This is due in part to the confusion associated with the delay of the “shared responsibility” mandate also know as “play or pay”. Rather than getting involved in trying to explain the details of different scenarios, I’m going to do my best to keep this high level and focus on the basics of data collection tied to Obamacare. Why do you need to collect this data you ask… to report to the IRS in 2016 for the 2015 plan year. We spoke about this a while back in our series about the Affordable Care Act, specifically in part 2 of our 6 part series titled “ACA Pay or Play – Reporting (Part 2 ACA series)“.

Again the delays associated with “play or pay” have only pushed off the need to comply with the ACA coverage requirements, they have not, I repeat, have not pushed off the need to comply with reporting requirements.

What Data to Record for ACA IRS 1095-C Reporting

OK, now that we have that cleared up, let’s get back to the requirements for data collection related to reporting. Here are several questions you might want to first ask yourself before proceeding. *Disclaimer- this is not an all-inclusive/complete list of questions you should be asking yourself. Rather, a sample. I’m sure there are plenty more questions that need to first be asked and pondered to get this right in the end.

1. Are you offering medical plans with embedded Rx coverage?
2. Are you offering standalone medical and carved out Rx coverage?
3. Are the plans you’re offering fully-insured or self-insured?
4. Are you covering non-employees on your plan, i.e. non-Medicare eligible retirees, COBRA participants? Especially if you are sponsoring a self-insured medical or drug plan.
5. Are you offering coverage to your employees and their dependents?
6. Are you maintaining eligibility records for your employees and their dependents?
7. Are you tracking employee time manually, or electronically with time and attendance software?

All of the above questions lead into one another and impact the types of data you should be collecting and may also impact the reporting requirements you as an employer may be subject to. These questions also provide answers to the types of data we should be collecting.

Regardless of how you answer the above questions, the following data elements are what you the employer should be focused on collecting and retaining in order to feel confident in your ability to not only comply with Obamacare, but also survive an IRS or DOL audit.

1. Employee name, SSN, address, DOB, DOH
2. Dependent(s) name(S), SSN(s), and DOB
3. Date employee first eligible for benefits
4. Date coverage first offered to an eligible employee
5. Date coverage elected, declined/waived by an eligible employee
6. Date coverage offered to eligible dependents
7. Restated eligible date for employees
8. Restated coverage offer date
9. Effective dates of coverage for elected medical and Rx coverage
10. Terminated dates of coverage for termed medical and Rx coverage
11. Hours worked for each employee for each month they were employed
12. Full time employee count for each month of a plan year
13. Total employee count for each month of a plan year
14. If coverage offered to non-employees (i.e. non-Medicare eligible retirees and COBRA participants) you will also want to track their names, SSN, addresses, DOB, and dependent information if dependents also covered under group plan (this is especially important if you are self-insured for either medical or drug or both).

ACA Data is Dynamic

As you can see from the above, there are a lot of data elements you need to be tracking and have available at your fingertips. Many of the above data elements are dynamic in nature and are constantly changing as you hire or terminate employees, employees change addresses, add new dependents, increase or decrease hours worked etc. To track this data via manual means could become a full-time job for someone, and if you’re like most employers you don’t have extra employees hanging around looking for things to do.

I would like to add that data collection is critical for two reason. Not only is it critical for determining eligibility and identifying those who should be offered coverage. It is also critical in assisting you in being able to report to the IRS all of the required information needed on forms 1094-C and 1095-C. Form 1095-C needs to be filed for all full-time employees offered coverage. Further complicating the data collection and reporting process (without going into details) are the affects that funding arrangements for the benefits you offer have in regards to employer reporting responsibilities. Requirements for self-insured groups vary significantly, and can be far more complex. For a more detailed review of these requirements we recommend downloading our white paper on the final 2015 reporting guidelines.

The Risk of Only Tracking Variable Hour Employees

If you’re planning to track information for a single subset of employees based on who you believe may be at risk you would be seriously jeopardizing your ability to properly report on all employees. Remember, it’s not just about tracking and identifying who should be offered coverage, but also being able to report on all those who were offered coverage. Therefore, we highly recommend that you track and retain data on all employees even if you already know that they are eligible and that you have offered them coverage. If not, you may have a surge of data collection come January 2016 when you have to recreate all of the data to populate the 1095-C forms. Failure to report would result in a $100 penalty per return and per statement according to the 6056 reporting requirements and penalties identified under section 6721 of the law.

If you do plan to track this information on your own and if you’re not already using a Total Workforce Management solution with time and labor management, or an employee benefits portal with employee self-service enrollment found within an integrated HR solution, we highly recommend you begin the search to find one. Just make sure that whatever solution you’re looking for can handle collecting all of the data elements mentioned above within one system! The last thing you need are a bunch of stand-alone systems requiring individual maintenance just to be compliant with the Affordable Care Act.

If you’re relying on your benefits broker and/or your current payroll service bureau to maintain this information and possibly report this information to the IRS on your behalf either through paper forms or by e-filing to the IRS, be sure to ask what additional cost might be associated with such a service and whether or not they too have all of the required data elements needed. Don’t just assume your broker and/or payroll service bureau will be handling this on your behalf!

Thanks for reading!

~John