New Privacy Concerns with ACA Reporting for Businesses with 50+ Employees

Like a real-life game of telephone, the communication of sensitive data that combines personal information from tax systems and health insurance information is a potential security nightmare. It is also the reality many employers must face this year as part of compliance with the Affordable Care Act.

The Affordable Care Act, or Obamacare, requires many employers to offer health insurance coverage to full-time employees and their dependents. The Internal Revenue Service developed Forms 1095 for employers to report the offer of that coverage to employees and to the IRS. Starting this filing season, reporting is mandatory for any company with at least 50 full-time equivalent (FTE) employees.

Due to these new requirements and unlike previous tax seasons, employers are now charged with tracking and providing private healthcare information to the IRS. This process opens the door for simple errors and could lead to misuse or abuse of personal information.

Greatland Corporation, a provider of W-2s and 1099s and extensive expertise regarding ACA reporting, is urging companies and organizations to understand the security implications of these news forms. Security has always been a consideration when filing, but Greatland recommends businesses take even greater precautions this reporting season.

If a company has at least 50 full-time employees or FTEs, they must file a Form 1095 on behalf of their employees, even for full-time employees who declined to participate in their employer’s health plan. Form 1095 describes the health insurance coverage that was made available to an employee. Full-time employees are those who worked an average of at least 30 hours per week or 130 service hours in a calendar month. Separately, the 1095-B, provides details about an employee’s actual insurance coverage, including who in the employee’s family was covered. This form is sent out by the insurance provider rather than the employer. Regardless of the specific versions of Form 1095, it is vital that businesses take added security measures this year.

Gathering information necessary to complete Forms 1095 presents a unique challenge to employers, since the form requires data typically stored in the employer’s payroll system as well as HIPAA-protected benefits information that is most often included in the employer’s human resources software. The challenge of correctly combining this information from two very different regulated databases and importing the data into the unfamiliar 1095 form is understandably causing early stress and can create security issues.

Additionally, with the increase in filing regulations this tax season, Greatland Corporation has noted an increase in businesses claiming to offer these services. Often these opportunistic companies fail to understand the detailed documentation, possess skills to navigate ongoing changes, and offer the software with security measures in place to keep this information safe.

In order to give customers peace of mind as businesses navigate their way through the complex process of ACA reporting, Greatland has included a variety of security features in their Yearli reporting software. The software operates under SSAE 16 SOC II and is designed to protect any entities utilizing technology and cloud computing for reporting. This level of compliance allows for confidentiality and privacy of personal information as well as protection against unauthorized access.

1095 Filing Deadlines

Providing 1095 forms became mandatory starting in the 2015 tax year and employers send the forms not only to their eligible employees but also to the IRS, making it doubly important that the sensitive healthcare information remains in safe hands. Employers are required to send these by the end of January; however, because January 31 falls on a Sunday in 2016, statements must be mailed by February 1, 2016. Businesses have until the end of February to provide this information to the IRS if filing paper forms, or until the end of March if filing electronically. Employers with 250 or more forms must file them electronically.

In 2016 (for reporting on calendar year 2015) employers and insurers are expected to be compliant with ACA reporting requirements. While incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016), employers/insurers are still required to file on time and make a good faith effort to comply. For more helpful tips on filing requirements, utilize this chart to Estimate Your Filing Requirement for a basic understanding of the steps you need to take.