New HR Management Feature Handles Outstanding Benefits Applications for 1095-C Filing

“I need to create 1095-C’s but some of my employees haven’t turned in their insurance applications! What do I do?”

Some customers have had problems filling out their 1095-C forms because employees don’t return their insurance paperwork. This may put employers in a bind because of two reasons:

1. In the event of an audit, they do not have paperwork showing that an employee elected to decline.
2. When compiling 1095-C’s, the program does not know the employee did get an offer but did not return the paperwork. So it does not report any code on line 16.

Well, Datatech is introducing a new feature to our HR Management software to deal with it: The Outstanding Applications feature. This feature gives you a way to tell the program that an employee has not turned in their benefits application. This new feature is a combination of a new option on the Compile 1095-C Information window and two new options on the Health Benefits Record.

The Outstanding Applications Option on the Compile 1095-C Information Window.

The first option introduced is on the Compile 1095-C Information window, as seen below. Find this window at ACA->Annual Reports->Compile 1095-C Information.

Checking this box affects the logic used to determine Line 16 codes in the following manner:

1. If an employee never returns their paperwork (i.e. no date returned), then the program treats the employee as if they declined coverage.
2. If an employee returns their paperwork late, for the period of time between the date offered and the date returned the program treats the employee as if they declined coverage. The affordability safe harbor code will be reported on line 16 if no other code applies during this time period.
   • If the employee was subsequently enrolled in coverage after returning the application, then the 2C code will be used to report months in which the employee was enrolled.
   • If the employee declined coverage, then the program continues to report the affordability safe harbor code after the date returned.

Let’s examine an how the program assigns these codes. Following is a screenshot of the Enter/Edit 1095-C window after this new feature assigns the codes.

In this example, the employee was given an application but didn’t return it. June was the first month that the employee was full time, so a 2D code is reported. But after that, since the application was not returned, a 2G affordability code is used for July and August. Note that the tool-tip shows the employee didn’t return the application (as opposed to the employee declined coverage).

If there was no outstanding application record entered, then the system would not know the employee was offered coverage. It would not put a code on line 16 for June, July or August, because the 2D code can only be used when an offer was made.

How Do I Use this Feature?

If you elect to use this feature, it is very simple to set up. Notice in our screenshot above that there are two new entries on the Health Benefits Record: the Appl. Not Returned checkbox and the Appl. Returned On date entry. If you want the new option on the Compile 1095-C Information window to work properly, you need to use these two options first.

The following step-by-step guide will explain what to do with these two entries. These steps can be followed when an employee is first hired and offered benefits or when you decide that this will be needed before 1095-C’s are printed.

The Outstanding Applications feature Workflow:

1. When adding or editing an employee’s insurance coverage, check the Appl. Not Returned box. Do not check Pre-Enrollment. Do not select a plan.
2. Ensure that this coverage record is Active using the checkbox in the bottom left corner.
3. Save the Record.
4. Once the employee returns the application, go back to the Health Benefits Record and uncheck the Appl. Not Returned box.
5. Enter the date on which the application was returned in the Appl. Returned On box.
6. Proceed to fill out the rest of the form. At that point, you will know whether they accepted or declined.
7. Save the record.

That’s all there is to it. You can then use the Outstanding Applications checkbox when compiling your 1095-C information. The program then selects which code prints on the 1095-C. That ensures no matter what the employee’s response there is always a code on line 16, so you will not appear negligent to the IRS.

How Does this Feature Interact with Reports?

After you make the Outstanding Application entry, the ACA Hour Eligibility Report lists full-time employees (those eligible for coverage) who did not return their paperwork in a separate group titled “Full Time Employees, Offered/Application Not Returned.” Use this to see which employees still have not returned their benefit applications.  The program does not attempt to enroll these employees in coverage automatically, as they have been in the past.

See an example of what this looks like in a report below.

This section can be used as a reminder of which employees have not returned their paperwork.  You may want to contact their supervisor to attempt to get them to return the paperwork (and make a notation on their benefit record when you do so).

Why Should I Use This New Feature?

This new feature will be very beneficial for companies that have a hard time getting their employees to return their health insurance applications. When using this option, the program treats any outstanding applications as if they were declined. When you print off 1095-C’s for your employees, any outstanding applications will generate the affordability Safe Harbor Code (assuming no other codes apply, such as the waiting period code). This will provide an electronic record to reference if the IRS ever inquires as to why an employee did not receive coverage.

The program does not require the use of these new options so it is up to you whether or not your company uses it. If your company does not have a hard time getting these applications back, then it may not be necessary to use this option. You can also use this feature on a case by case basis. So if you only have a single employee who neglects to return a health insurance application, you can use this feature to fill out the 1095-C with the correct codes.

Have Any Questions or Want More Info?

Currently, this article is our only documentation on this new feature. However, we will be updating our manuals and in-program help very soon, perhaps even by the time you read this article. If you have any questions or feedback on this feature, please leave a comment below or preferably email HR Support at HRSupport@Datatechag.com.

This new feature is currently available to download using the Check For Updates option within the HR Management software.