How long will the ACA reporting process take? The IRS may be able to help you determine how much of your schedule you need to block off.
When the IRS released the final instructions for 1095-C reporting, it included another critical piece of information other than just how-tos: The amount of time its likely to take employers to complete ACA returns.
The IRS estimates it’ll take employers an average of 12 minutes to complete each 1095-C return.
12 X 50, 100, 150 …
When you consider that at the bare minimum, employers subject to the ACA reporting requirements will be completing 50 returns, the reporting process is a significant time commitment. At 12 minutes per form, those 50 returns should take 600 minutes or 10 hours to complete.
Of course, this is just an estimate and, considering this is a brand-new, high-stakes process, it’s likely to take many employers longer than the average amount of time the IRS estimates. Still, the estimate does help give you some type of perspective on the time-commitment necessary for the actual reporting process.
Lines 14 and 15
While you’ll no doubt want to go over the IRS’ instructions with all parties involved in the reporting process, there are two lines in the instructions that are likely to be particularly helpful when it comes time to do the actual reporting:
Line 14: This line deals with the reporting process when an employee is terminated and COBRA continuation coverage is offered. If the terminated employee enrolls, the instructions say to use the appropriate indicator code. The indicator codes are listed on page 10 of the final instructions.
The IRS instructions also tell you what code to use on this line if an employee is terminated and denies an offer of COBRA continuation coverage.
When this occurs, you just use code 1H (no offer of coverage) for any month that the offer of COBRA continuation coverage applies.
Line 15: For this line, the IRS offered a quick way to calculate the lowest cost of the monthly premiums available for each employee.
To determine an employee’s monthly contribution, employers will divide the total employee share of the premium for the plan year by the number of months in the plan year.
A version of this article was published previously on our sister website, HR Benefits Alert.