Affordable Care Act Setup

The Affordable Care Act (ACA) has been requiring employers to file the 1095-C since 2014.

This document will contain an overview of preparing the 1095-C, and how you can use Spectrum to prepare for and fulfill this federal reporting requirement. For more information on the ACA, please see: https://www.irs.gov/affordable-care-act.

Important: The following information is our current understanding of the Affordable Care Act's reporting requirements and how they can be processed within Spectrum. It is not intended to be offered as legal advice. Please consult with your company's CPA or legal counsel to ensure your organization's compliance with the Affordable Care Act.

Getting Ready for the Affordable Care Act

One of the requirements of the Affordable Care Act is that large employers file a Form 1095-C. Viewpoint recommends gathering this information throughout the course of the year, rather than waiting until the Form 1095-C due date.

Key data and information required to fill out the 1095-C

  • Employee Social Security Number (SSN), Date of Birth (DOB), name and address. If the employer is self-insured for medical insurance, they also need to provide spouse and dependent SSN and DOB.

  • Plan start date.

  • Names, addresses and employer ID numbers of all employing companies.

  • Total number of employees (full-time equivalents) for each calendar month. Employers will use this figure to determine if they meet the size threshold of certain reporting requirements. Please see https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer for more information.

  • Employer coverage offered and employee acceptance (or refusal) of coverage.

  • Employee rate of pay, W-2 wages, federal poverty line. Part II of the 1095-C report requires subject employers (ALEs) to analyze the coverage they have offered with regard to each of their employee's income, and report whether or not the coverage qualifies as the minimum required coverage. The employer then also determines if they are subject to paying an assessment to the IRS and whether the employee is eligible for a tax credit. Please see https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act for more information.

The 1095-B and 1094-B

For those employers who will have fewer than 50 full-time (and full-time equivalent) employees and who are self-insured, please note that you will be required to file Forms 1095-B and 1094-B. These two forms are not provided in Spectrum.

For assistance on these forms, please contact your outside CPA.

Gathering 1095-C information through the year

The 1095-C Employee Worksheet in Spectrum is available to capture employee coverage information throughout the year. It can be exported at any time, and provides a location to manually record and store coverage information. When exported, the Employee Worksheet contains the names of employees who have hours recorded in payroll in the year specified. For self-insured employers, it can also contain those employees' dependent names, DOBs and SSNs.

See the ACA Processing topic for specific details.

Preparing with Nelco for 1095-C filing

For the 2021 1095-C filing, Viewpoint will provide e-filing through Nelco. Any follow-up 1095-C corrections will be handled by Nelco for a fee, and printing and mailing of physical forms are available through Nelco also for a fee.

In preparation, please contact Nelco at 1-800-266-4669 to obtain your prepaid filing code for 1095-C filing. You will need to provide the total number of employee records you are processing, and your Spectrum customer ID. If you do not know your customer ID, you can contact Spectrum Support by visiting the Viewpoint Customer Portal.

Overview of 1095-C Form

The following explains how Spectrum can be used by the Payroll Administrator to perform their analysis when completing Form 1095-C.

Part I. Employee and Employer Information

All of the information for filling in Part I of the 1095-C is available within Spectrum. It is also used to populate employee W-2s.

Common issues with this data are: fewer than nine digits in the SSN field, and empty Last Name fields. Two locations that can assist with SSN validation: Unemployment Tax report (Payroll > Reports > Unemployment Tax) "Show entire social security number?" and the W-2 Processing screen (Payroll > Period End > W-2 Processing). We advise employers to validate employee information prior to finalizing W-2's and 1095-C's.

Part II. Employee Offer and Coverage

Part II requires some analysis of the coverage offered and the employee's acceptance of it. Viewpoint recommends contacting your Benefits Administrator or outside CPA for guidance on filling out these fields.

  • Employee's Age on January 1st: Enter the employee's age on January 1st.

  • Plan Start Month: Enter the two-digit plan start month.

Review instructions of forms 1094-C and 1095-C here for more information:

https://www.irs.gov/instructions/i109495c#d0e655

These links on the IRS website have helpful explanations of the shared responsibility requirements and reporting requirements:

https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions

And FAQ:

https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act

The following steps walk through lines 14-16:

Line 14: Offer of Coverage

The Employer will classify each employee's offer of insurance for the calendar year. When the offer does not cover all 12 months, they will record the classification for each calendar month. Using the import worksheet, the code can be entered for the entire calendar year or by month if there is variation during the year.

Step 1. Determine Full or Part Time

By employee, determination must be made whether the employee is full-time or part-time.

  • Use Payroll's Average Hours Report to perform either the monthly measurement or look back method to make the classification.

  • The classification can be stored in the 'Health coverage' field on the Employee Main Properties page.

Step 2. Determine if Health Care was Offered and Available Each Month

When the offering of health care was not tracked throughout the year, it will have to be recreated for 2021. Review reports in the system and other supplemental documentation to identify evidence that the employee was insured for the timeframe.

  • Use Vendor Payment History along with Document Imaging to review supporting documentation for the health care invoices.

  • Use the Add-on History and Deduction History Reports to review codes that represent health insurance. (Both reports are located at: Payroll > Reports.)

  • Use the Union Report to review fringes that represent health insurance.

Use this information to determine whether or not the employee was offered and accepted health care during the time frame.

Step 3. Determine if Health Care Plan is Appropriate

The Act refers to appropriate health care as "Minimum Essential Coverage (MEC)." As Spectrum cannot evaluate if the plan is appropriate, it is recommended that you contact your Benefits Administrator or outside CPA for guidance.

Step 4. Fill in Line 14

Using the facts and circumstances discovered above, fill in line 14 with one of the following codes:

1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% of the mainland single federal poverty line, and at least minimum essential coverage offered to spouse and dependent(s).

1B. Minimum essential coverage providing minimum value offered to employee only.

1C. Minimum essential coverage providing minimum value offered to employee, and at least minimum essential coverage offered to dependent(s) (not spouse).

1D. Minimum essential coverage providing minimum value offered to employee, and at least minimum essential coverage offered to spouse (not dependent(s)).

1E. Minimum essential coverage providing minimum value offered to employee, and at least minimum essential coverage offered to dependent(s) and spouse.

1F. Minimum essential coverage NOT providing minimum value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents.

1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year.

1H. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage).

1J. Qualifying offer - employee & conditionally spouse.

1K. Qualifying offer - employee + dependents & conditionally spouse.

1L. Qualifying offer w/ HRA - employee, employee residence zip.

1M. Qualifying offer w/ HRA - employee + dependents, employee residence zip.

1N. Qualifying offer w/ HRA - employee + spouse + dependents, employee residence zip.

1O. Qualifying offer w/ HRA - employee, employee work zip.

1P. Qualifying offer w/ HRA - employee + dependents, employee work zip.

1Q. Qualifying offer w/ HRA - employee + spouse + dependents, employee work zip.

1R. HRA not affordable - employee + spouse + dependents.

1S. HRA offered to part time employee.

1T. HRA offered to employee + spouse, employee residence zip.

1U. HRA offered to employee + spouse, employee work zip.

Line 15: Employee Required Contribution

Line 15 is only required when Line 14 is 1B, 1C, 1D, 1E, 1J, 1K, 1L, 1M, 1O, 1P, 1Q, 1T or 1U.

The employee share is the portion of the monthly cost that would be paid by the employee for self-only coverage, whether paid through salary reduction or otherwise. The Employee Required Contribution may not be the amount the employee paid for coverage. See your Benefits Administrator or outside CPA for guidance.

Using the import worksheet, the code can be entered for the entire calendar year or by month if there is variation during the year.

Line 16: Applicable Section 4980H Safe Harbor

The employer fills in Line 16, only if there is an applicable code describing the employer and/or employee's situation.

By employee, the employer will use the following information in an analysis to determine which code to enter:

  • W-2 Box 1 wages: Use to determine if eligible for W-2 safe harbor or federal poverty line safe harbor.

  • Hourly wage: Use to determine if eligible for rate of pay safe harbor or federal poverty line safe harbor.

  • Employee Hire, Rehire and Termination Dates: Use to determine whether or not employee was employed for an entire month or a month at all.

  • Hours worked by month (based on calendar year): Run the Average Hours Report once each month, or once for each week of the year. Useful to determine whether or not employee was employed during the month.

  • Add-on History Report: Use to review whether health insurance was paid for the employee.

Based on the facts and circumstances from the above, line 16 is answered with one of the following codes. Using the Import Worksheet, the code can be entered for the entire calendar year or by month if there is variation during the year.

2A. Employee not employed during the month.

2B. Employee not a full-time employee and did not enroll in minimum essential coverage.

  • Employee is full-time for the month and whose offer of coverage (or coverage if the employee was enrolled) ended before the last day of the month solely because the employee terminated employment during the month.

  • Use this code for January 2021 if the employee was offered health coverage no later than the first day of the first payroll period that begins in January 2021 and the coverage offered was affordable for purposes of the employer-shared responsibility provisions under section 4980H and provided minimum value.

2C. Employee enrolled in coverage offered.

2D. Employee in a Limited Non-Assessment Period. When employee is in an initial measurement period, use 2D and not 2B. Do not use 2D when employee is eligible for multiemployer plan.

2E. Employee enrolled in a multiemployer plan.

2F. Employer used Form W-2 safe harbor.

2G. Employer used federal poverty line safe harbor.

2H. Employer used rate of pay safe harbor.

Part III. Covered Individuals

Only employers providing self-insured health coverage need to fill out Part III.

The names of all covered individuals (including the employee), and their Social Security Number or Date of Birth, are required. In Spectrum, individuals who will be included in Part III reporting will be included in the Export Worksheet if their information is entered at Human Resources > Employees > Insurance Coverage.

  1. Navigate to Human Resources > Maintenance > Insurance Type.

  2. Create a new insurance type for the self-insured coverage, if one has not already been set up.

  3. Navigate to Human Resources > Maintenance > Insurance Codes.

  4. Create a new insurance code for the self-insured coverage, if one has not already been set up.

  5. Navigate to Human Resources > Employees > Dependents.

  6. Enter the Employee code of the covered employee.

  7. Click New.

  8. Enter the type of dependent and the name, gender, and DOB or SSN of each employee dependent. Include the employee in this list in order for them and their identifying information to show up in the 1095-C Employee Worksheet export.

  9. Navigate to Human Resources > Employees > Insurance Coverage. The names on this screen will be exported in the 1095-C Employee Worksheet export.

  10. Enter the Employee code of the covered employee.

  11. From the drop-down, select each of the Dependents entered on the Dependents screen.

  12. Enter the Insurance code from the drop-down.

  13. Enter a Status from the drop-down.

  14. Click OK to finish the entry.

Then run the Add-on History and Deduction History Reports including only medical insurance codes, to review the periods during which employees and their dependents were covered. Both reports are located at: Payroll > Reports.