All the Facts About Affordable Care Act (ACA) Reporting in Microsoft Dynamics GP

The Affordable Care Act (ACA) is one of the biggest things to happen in this country, socially and governmentally, since Medicare in the mid-60s. It will impact how companies choose to provide or deny health care coverage to their employees with the potential of having a big impact on financial reporting, starting right now.

With IRS deadlines looming many companies want to know; what is the Affordable Care Act, what type of compliance reporting can be done in Microsoft Dynamics GP, what types of companies are most impacted, what are the penalties and much more?

I interviewed Helen Karakoudas, the owner of Sypnio Software, an company that focuses only on ACA reporting for Microsoft Dynamics GP. One of the biggest takeaways from this interview for me is that if companies wake up on January 1, 2015, and pay attention to ACA, it will already be too late. So get all the facts here:

Q: In the simplest terms, what is the Affordable Care Act?

“The Affordable Care Act is a clunky and complicated federal law, which is being rolled out in phases, that addresses nearly every aspect of how health care is delivered in the United States. The intent of this law is to expand access to health care coverage. The result is a series of mandates for individuals, insurance companies, and employers. Individuals must get coverage or face financial consequences. Insurance companies must cut out hurdles to coverage or face financial consequences. Employers of a certain size must provide basic coverage for employees who are deemed to be full-time or face financial consequences.

The ACA picks up on what was done after World War II, when many employers started offering coverage to employees as a way to recruit and retain workers. It was observed that, over the years, employers found creative ways to limit the coverage they offered as insurance companies were finding creative ways to exclude individuals with preexisting conditions from any coverage. The end result of such cost-saving measures was an expanding population of working Americans without any health insurance.”

Q: From a technology and reporting standpoint, what do companies need to be aware of?

“If a company has not been paying attention and actively looking at how to get a running start toward transforming their payroll processing, they’re going to be caught unprepared.

If you’re processing payroll for an organization that has 100 or more full-time employees or full-time equivalents, the first ACA-mandated report you will have to file with the IRS will be due in January 2016 for employee data – tracked month-to-month – in 2015.

If you’re processing payroll for an organization that has 50 to 99 full-time employees or full-time equivalents, you may have relief from the mandated January 2016 reporting if you meet certain criteria. All employers with 50 or more full-time employees and full-time equivalents will have to submit reporting to the IRS in January 2017.

You need to look at this beyond what it takes to produce a W-2 – that’s just for summary data from the year before. ACA reporting to the IRS must be broken down by month detailing both employee’s access to employer-provided health care and employee contributions to employer-provided healthcare. It boils down to monthly tracking of hours and dollars.

If companies with 100 or more full-time employees or full-time equivalents haven’t found a way to transform their payroll processing by January 1, 2015, they’ll be facing a lot of catchup that will require manual data manipulation. And this always raises the question of how accurate the reporting will really be.

And even when payroll systems are in place, they will need to be updated regularly as continuous tweaks are made to the legislation.”

Q: Which forms need to be submitted to the IRS for ACA compliance?

“In January 2016, every employee that the ACA defines as full-time will need to get Form 1095-C. It’s important to note that any employee who in any one month of 2015 worked 130 or more hours must be issued this document regardless of whether that employee was offered access to employer-provided health care coverage.

The transmittal of this form that documents employee access to employer-provided health care coverage is Form 1094-C, which companies then have to file with the IRS before the end of the first quarter of 2016.

These forms are complex and were slow in coming from the IRS. Drafts were released at the end of July and instructions for those drafts weren’t released until the end of August. And they’re still in draft form, pending a formality of finalization. After the release of the drafts alone, industry groups were up in arms. The National Retail Federation immediately commented, saying how crazy Form 1095-C is.

A lot of the craziness goes along with the fact that companies need time to prepare and transform their reporting systems – and the political drama behind most ACA headlines has unfortunately kept a lot of companies from understanding they need to get their ducks in a row about the rollout of the employer mandate.”

Click here for a DRAFT of Form 1095-C, which will be a new yearly staple for distribution to employees just like a W-2.

Click here for the draft instructions, released August 28, 2014, that provided much-need clarity on information that needs to be tracked.

Q: What are the penalties if ACA reporting is not done?

“There are different ways of not getting it done and different levels of penalties. Even if you are a company that is providing health care, if you can’t – or don’t – produce the proper documentation, you are still going to pay a penalty.

So if you don’t file the very basic forms that need to be generated in January 2016, it would be a matter of a penalty of $100 per form, per employee, to a max of $1.5 million per company. After that, shared responsibility payment penalties are based on whether affordable health care coverage was offered to ACA-defined full-time employees and if an eligible employee received a premium tax credit on a health insurance marketplace exchange.

To cover the range of penalties a company faces, you need a whole flow chart! In fact, The Kaiser Family Foundation, a nonpartisan group that researches major health care issues, has a flow chart which show the convoluted ways the IRS can assess employer penalties.”

Click here for the graphic from the Kaiser Family Foundation.

Q: What types of companies or industries need to be especially concerned about ACA compliance?

“Companies that need to be especially concerned about ACA reporting are those with employees who are not retained, that employ people whose hours vary, and who hire people for seasonal jobs. For example: retail stories, the restaurant industry – particularly fast-food franchisees – and staffing and recruiting firms.

Employers that hire at the lower-wage scale are especially vulnerable to ACA requirements because they not only have to provide access to employer-sponsored health care coverage to their full-time employees, they also have to make sure that coverage meets the ACA criteria for ‘affordable.’”

Q: What does the Sypnio add on product for Dynamics GP do?

 “We focus on the two challenging aspects of assuring employer reporting compliance with the IRS requirements of the ACA: tracking employee eligibility and determining affordability.

Our software is a system enhancement that integrates with the Payroll module of Microsoft Dynamics GP to consume employee data already being collected in the ERP system that a company has invested in. We automatically format that employee data according to ACA terms and ACA calculations – while the employee data is secure and being continuously updated in Dynamics GP (Great Plains).

Our software is compatible with all supported versions of Dynamics GP and will produce both the ACA-mandated form that is to be distributed to full-time employees, and the transmittal form that’s to be submitted to the IRS. For the transmittal form, our software will do the e-filing.

Essentially, we provide ACA risk management. For companies that have made the ACA “play” decision – to work within the new federal guidelines for offering coverage – our formatting of their employee data provides the needed business intelligence for eligibility and affordability. If a company’s payroll and HR managers are talking “standard measurement period,” “initial measurement period” and other ACA lingo, then we’re their go-to for interpreting these terms and calculations based on them for their accounting.

For companies that have made the “pay” decision – to not offer their employee health care coverage and face the financial consequences – our software provides reports they can review internally to understand their potential liability should the floodgates open when an employee to whom they issued a Form 1095-C gets a premium tax credit from a health insurance marketplace exchange.

In an announcement to some Dynamics GP Partners last week about year-end updates for GP 2013, Microsoft said that coming adjustments to the Payroll module of GP would include the capability to generate Forms 1095-C and Forms 1094-C from GP 2013 and GP 2015. The announcement was clear that this functionality wouldn’t be available for Dynamics GP 2010, and that e-filing of Form 1094-C would not be available.

Through a call from Microsoft directly, we got separate confirmation that Microsoft will not be releasing ACA enhancements for tracking eligibility and affordability.

With respect to the forms alone, a company will need our software if they are running on a supported version of Dynamics GP earlier than GP 2013.”

Q: Do you see a certain size of Dynamics GP user, or a certain number of payroll employees as being the best fit?

 “This would be a fit for companies processing payroll for any number of employees. It was originally designed for a company that processes payroll for 36,000 employees, but it will work just as well for companies processing payroll for 50 or fewer employees. Keep in mind that employee count is not just full-time employees but also the aggregation of all part-time hours in order to calculate a full-time equivalent.

Companies that run payroll on a single GP database – no matter how large that database is – are fine with our core application.

As you get into multiple GP databases, we offer a database combiner add-on to our core application which addresses another ACA complication: reporting for company entities that share employees must be unified.”

Q: How much does Sypnio cost?

“The core application Sypnio ACA Reporting is $1,600.00 (a one-time fee) and there is an 18% annual enhancement fee that is mandatory for the first year. The enhancement fee gives you access to those important updates that I mentioned before, so you are always compliant with the latest tweaks from D.C. The Sypnio ACA Database Combiner tool is $600.00.”

Q: How much time does it take to implement Sypnio?

 “We want companies to work with their Microsoft Dynamics GP partner, such as CAL Business Solutions, to install this product. On average, it takes about 2 hours for implementation and training.”

 Q: Why should a company choose to work with Sypnio?

“Unless you have the passion for keeping up with tweaks in federal law – and the time to translate takeaways from that passion into coding on the job, you’ll appreciate our help. The legislation was written in such a messy way just to get passed, there’s going to be some cleaning up that’ll have to be done on it after it goes into effect for employers and insurance companies.

So you can’t rely on a solution that works only for now. To stay current with whatever your ACA strategy is, you need people who are able to quickly interpret what changes are coming out of Washington and factor those changes into your payroll software.

Part of our job is to clear the fog. For Dynamics GP Payroll users, we can say, ‘Hey, you don’t have to worry about all this, because we’ve already on it – and here’s how we can hold your hand through it.’

Sypnio was formed as a spin-off of a Dynamics ERP partner. We brought ACA reporting for Microsoft Dynamics GP to market, and later broke away so that we could focus only on this product and the 24/7 attention it demands.

When we say our solution ‘integrates’ with Dynamics GP, we don’t mean periodic handshakes just outside of GP. We mean continuous analysis within Dynamics GP of employee data collected on familiar screens running in GP. Sypnio ACA Reporting is written in the language of Dynamics GP, it’s native to GP, so it calls for no data migration to an external processor.”

Of course, we’re in business only because of complexities with the ACA. But we don’t gouge for specialty expertise; we channel fairness into our pricing. For Microsoft Dynamics GP users, we offer an ACA engine that’s comprehensive and still cost-effective.”

Q: What is the next step for ACA reporting in Microsoft Dynamics GP?

If you are interested in working with a Dynamics GP partner familiar with the ACA requirements for payroll and financial reporting, contact CAL Business Solutions.

Sales@calszone.com or 860-485-0910 x4.

Learn more about Sypnio at: http://www.calszone.com/marketplace/company/sypnio-software/

By CAL Business Solutions, New England Microsoft Dynamics GP Partner