A Story About What It Takes To Get ACA Right
Once in a while, after thirty years of service to the benefits community, a question challenges me. Anyone who knows me knows, I love the detail and a challenge.
The unread 2,500 pages of ACA has been a challenge since the beginning and the question I received about it this time, made me dig for the right answer.
A friend and business owner asked, but not quite this clearly, “when does an emerging ALE (applicable large employer), who grew to more than 50 employees in 2017; 58 FTE, have to do certain things?” My short answer was in the year following the arrival of the status of being an ALE things go in motion. In this case January 2018. The payroll vendor had a report that did the calculation for 2017 and stated they were 50+ for 2017; they’d be filing 1094/1095’s on the employer’s behalf. My friend said they were searching for answers because they weren’t sure about what this meant and weren’t getting clear answers from their payroll vendor, agent, any CPA, or others.
For a moment, my ego was gratified that this friend knew I would know the answer.
Agent/Broker/Consultant Process Produces Bad Information
I met with my friend and reviewed what he had been given. Asked questions, and commented simply, an ALE has to make an offer that’s affordable and is required to report on the same in the year following. Well, this answer was different than the current agent and the current agent was going to defend himself.
None of the agent/broker/consultant assaults on the truth mattered to me, I had been here many times before. Heated contests of the ego and knowledge over a law that is so difficult to be certain about that these contests are always a battle over details. The agent did have some good points, that in the first conversation had not come out because for me, on February 1st, 2018, this employer was not making an offer and it was not affordable, and he had 8 covered of 58, and he was not making plans to file anything for 2017.
Story Is What’s Broken
True enough, some of what the agent was saying was proper and I accepted any learning, we do learn from these battles, but the pain for my friend was excruciatingly bad. The agent and I went back and forth via my friend’s email box for a week.
Indulge me in a rant about this process, recall my prior stories about what American Employers expect, they think this improves healthcare; this is the edge of innovation. The process of pitting two consultants against each other and the exchange of information that is so inefficient, owners ironically, identify this as “shopping, my agent.” No, it’s free consulting agents do because they have to. Sadly, again, this is the worst process for owners, it rarely gets to the truth about regulations, compliance, reporting, plan document requirements and everything IFEBP.
This is why so many DOL rules and IRS rules are ignored because this process is what produces new business for agents/brokers/consutlants but never produces better value for employees and healthcare consumers. Read my posts on healthcare white paper.
It is bad for everyone, this process of comparing mini pieces of the truth is free consulting, a time waster. We should put to work a process that challenges the healthcare system, not this mess.
Sadly, my friend was forced into learning about ACA by having my comments compared to the existing agent. Then, the agent would pivot and offer some new piece of information. This process went on and included a conference call with the VP of Operations of the health plan who was actually an MGA for the carrier but represented themselves as the carrier. He said, “I just got off a conference call with the VP of Operations” of such and so carrier. Being curious, I did some detail checking. Turns out, the managing general underwriter (carrier wholesaler) was the representative on the conference call and not the carrier.
I found myself in an old fashion dual, it started with the agent stating they did not have to report to the IRS until September 2018, in unison with their health plan renewal. They cited a February 2014 notice about transition relief. They didn’t have IRS notices, nor did they have any comments about the January 1st, 2018 ALE requirements. They didn’t discuss filing deadlines, they only discussed health plan requirements.
There was no discussion about being required to offer affordable coverage effective January 2018. And, be able to report that. From the shards of information presented to me, waiting until September 2018 would be a costly delay.
In chatting it through with a few benefit experts, what the agent was saying, that had some truth, was the filing for 2018 would be done in 2019. That is true, but to me not doing anything now, would mean there filing for 2019 would not show an offer or it being affordable.
Asking The Right Question Makes The Difference
There was one more fact I was struggling with. Where could I find confirmation of this question:
Is it right for the payroll vendor to file 2017-1094,1095’s? And, second, if that is true, would it make sense to include the healthcare data for employees that had it? Should the forms be blank as the payroll vendor proposed?
Alas, Poor Ego
After a few sleepless nights thinking I’ve harmed my friend by subjecting him to this process I decided to do what I always do. Dive in, be relentless and dig until I get the answer.
My ego likes to be right, duh, who’s doesn’t. But, I’m more than willing to be wrong, ouch to the poor ego. Turns out, I’m partially wrong and right.
But, Village Idiot?
In many ways, I say the dumbest things it’s true. Words pop-out and my Lovely Bride will say, “Tom Brady plays for New England, not the Jets.” On benefit things where I’m more precise, I avoid shooting from the hip reserving an answer to the fruits of research and a well thought out point.
How could my instant answer have ended up being incorrect leaving my friend confused about his companies obligation? Even though he’s looking to a broken process of agent v. agent to get good answers and I can see some of the truth in what the other agent says but how that agent answer alone will harm my friends company.
Alas, I fell back on something I’ve gotten used to since March 26th, 2010. No legislators read the bill, and most consultants have not read it either. Everyone takes summaries, guestimates, and word of mouth instead of searching for the truth.
With this challenge in front, I turn to the group I’ve trusted for honest, unfiltered answers, the IRS, DOL, and other regulators have done an amazing job of posting clarity on their websites. And, friends in the ISCEBS IFEBP educational world.
But, on this particular topic, clarity has been elusive. So, I keep digging.
I take nothing for granted and I challenge myself for the answer I know must be there. Partly to salvage my integrity, pride and give my ego a boost (humility comes in moments like this). Not to mention, help my friend. But, I’m searching as much for myself now, as for him.
Moving Up to 50+
“No relief is provided in the case of reporting entities that do not make a good-faith effort to comply with the regulations or that fail to file an information return or furnish a statement by the due dates (as extended under the rules described above).
In determining good faith, the Service will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the Service and furnishing it to employees and covered individuals…” IRS notice 2018-6
This means, my friend must file for 2017, just as the payroll provider suggested. I highlighted the notice items that apply to this directly A.C.A IRS extension notice 18-06 . Now, there is the possibility with all the citiations within the notice that I’ve not dug deep enough. Can you believe that? But, given that a conservative person would file based on this notice, and there’s no harm in filing, I’d recommend they file.
In the year you are going to be 50 make affordable offers, but the year following, please file.
There are a few other items, they have a pool of money they give employees without a designation, I’ll work with my favorite attorney on this item. Another set of questions, would this pool be considered an offer? Plus, based on the amount that varies by person, is the offer affordable? And, well, there’s more questions.
Please, if you have a different view please shed light on it.
I hope you enjoyed the story of ACA and the agent dual. Welcome to the world I live in.