Our support team has been busy answering the following questions:
- Some employees are getting forms and I don’t know why
- Some employees are NOT getting forms and I think they should
In order to fully understand when our solution creates a form, it is important to ensure there is a clear understanding of the requirements for reporting from the IRS. I have broken down various scenarios below. Pleaser review these and then consider your employee group in context.
Full Time Employees
When an employee is hired with the reasonable expectation that they will work in excess of 30 hours per week, their ACA Employment Status on the Employee Maintenance page should be set to “ACA Full Time”. In this situation, the system will create a form for the employee once their waiting period has been completed. Thus, an employee hired in December 2022 with a 60 day waiting period will NOT get a form in 2022. This is because the employer is not *required* to extend an offer of coverage to that employee in December. Thus, the employee was never “eligible” for coverage in 2022 and therefore a form is not created.
Part Time Employees – Lookback Measurement Method
When an employee is hired and the employer does not have a reasonable expectation that the employee will work in excess of 30 hours per week, their ACA Employment Status on the Employee Maintenance page should be set to “Use Measurement Method”. In this situation, the system will measure the employees hours for two distinctly different periods of time (most oft these are 12-month periods).
The first period of time is the “Initial Measurement Period”. This typically begins on the first day of the month following the employment start date. The second is the ongoing “Standard Measurement Period”. At the completion of each of these measurement periods, the system will calculate the average hours worked per month during the measurement period and then make a determination as to whether the employee should be extended an offer of coverage. If so, the system assumes that the offer of coverage continues throughout the “Stability” period.
So, consider an employee who was hired in November of 2021. Their 12-month Initial Measurement Period would run from December 2021 until December of 2022. At which time, if the employee has averaged in excess of 130/month, the employer has a period of time (aka the “Administrative” period) to extend an offer of coverage. Let’s say the employer has a 2 month Administrative period. The employer would extend an offer of coverage effective February of 2023. This employee would never have been eligible for an offer of coverage in 2022, therefore, the employer is not required to report for this employee and our system will not generate a form.
Next, consider an employee who was hired several years ago. Let’s assume that their Standard Measurement Period goes from October through September and that the employer has a 3 month Administrative period. This setup is common for calendar year plans. In this situation as seen below, when we are creating forms for reporting year 2016, the time period for which transactions are evaluated in order to determine whether or not an employee should be extended an offer of coverage and, as a result, should receive a form is from October of 2014 through September of 2015. See the image below for clarification.
Just because an employee averages in excess of 130 hours per month in 2016 has no bearing on whether they get a form for 2016. This employee would need to average in excess of 130 hours per month from October of 2014 through September of 2015.
So to answer the questions from above, answer the following questions:
- Are they a full-time or part-time employee?
- If full-time, have they completed their waiting period?
- If part-time, are they eligible for an offer of coverage based on their hours during the Initial and Standard Measurement Periods?
- How are your Standard Measurement Periods setup?
- How long is your Initial Measurement Period?
Once you have answered these questions, you will likely be able to ascertain whether or not they should receive a form.
One setting within our system that can help you identify why an employee is not getting a form is the “Only Generate 1095-Cs for Eligible Employees” checkbox on the Company Setup page. This is typically marked by default so that you do not create superfluous forms. However, you may unmark this checkbox for each company and rerun the Year End Close process to recreate forms for “ineligible” employees as well.
Questions / Resources
If you have questions or comments please email Support@integrity-data.com.
If you would like to search for information and resources for Integrity Data products check out the following sites:
- Knowledge Base: https://www.integrity-data.com/knowledge-base/
- Videos: https://www.integrity-data.com/video-library/
Last Review: 6/8/22 – Revision: 1.1
ACA Compliance Solution