• Do you need a Wrap document?

    According to the Employee Retirement Income Security Act (ERISA) passed in 1974, employers offering health and welfare benefits (health, dental and/or vision plans, AD&D/Term/Disability Insurance, wellness programs, etc) are required to provide plan participants with a Summary Plan Description (SPD) that clearly outlines details about the plan, its administration, and its benefits and claims process. (Click here to learn more about SPD documents).
    ESC provides ERISA-compliant SPDs to enrollees of the plans we offer, but this is not always the case with other benefit providers. In many cases, plan administrators provide plan documents that are informative but do not meet the ERISA-compliant standards of an SPD. Wrap documents are essentially mega-SPDs that help streamline the compliance process for companies offering multiple benefit options to employees.


    The ACA has provided government agencies that deal with ERISA issues additional resources to be more focused on compliance-related matters. The penalty for failing to provide a plan participant with an SPD on time is $110/day PER PARTICIPANT and failure to file a IRS Form 5500 (only applicable to companies with 100 or more ENROLLED in benefit plans, click here to learn more about IRS Form 5500 requirements) carries a $2,140/day penalty.
    There are 3 key reasons an ESC client would want to utilize a Wrap document to fulfill their ERISA SPD obligations:
    1. Your staffing company offers other health and welfare benefit options in addition to those provided by ESC;
    2. Your staffing company offers benefits “pre-tax” under a 125 plan;
    3. Your staffing company is required to file IRS Form 5500 
    In these cases a Wrap document will provide an easy, efficient way to remain in compliance with ERISA requirements and save your staffing company thousands in penalties.


    Failure to comply with ERISA requirements is costly. Until now, finding affordable qualified ERISA legal advice has been impossible. That’s why ESC is excited to announce a new partnership with myHRcounsel that provides you with affordable access to reliable legal advice.

    For as little as $37.50 per month, ESC clients can obtain an ERISA-compliant Wrap document solution and access to a compliance calendar, library of legal forms, and notices. For just $105 per month ESC clients can receive all of the above AND unlimited phone and email access to myHRcounsel’s ERISA, ACA compliance, and HR issue attorneys in all 50 states. ($165 per month if creation of IRS Form 5500 is included). 
    Click here now to request more information on this game-changing service partnership.
  • Important Reminder: PCORI Fees Due By July 31st, 2018

    The Patient-Centered Outcomes Research Institute (PCORI) trust fund fee was established by the Affordable Care Act and is assessed for each plan year ending after September 30, 2012 and before October 1st, 2019. The fee is applicable on sponsors of self-insured plans and is intended to help fund medical research.


    Essential StaffCARE has prepared a helpful guide to understanding and calculating PCORI fees.

    Please review the guide here.

  • Avoiding ACA Reporting Pitfalls: How to Stay in Compliance

    Reporting of Offers of Health Insurance Coverage by Employers (Forms 1094/1095) is well under way.  As such, employers are no doubt scrambling to complete the forms in a timely and accurate way in order to avoid costly IRS penalties.

     To help get through the reporting season, the following are a few things to keep in mind as you proceed through the often daunting and confusing reporting process.
    It is important to remember that, in the eyes of the IRS, reporting is ultimately the responsibility of the employer. Employers working with reporting vendors still bear the responsibility and liability for their submissions to be timely and accurate. Thus, if an employer is deemed to owe penalties under the reporting rules, it is the employer, and not the vendor, who will be responsible for those payments.
    Under the Affordable Care Act, applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent employees, in the preceding calendar year—must report certain information to their full-time employees and the IRS about the health care coverage they have offered (if any). 
    With deadlines for 2017 reporting just a couple of months away, ALEs should begin thinking about the following reporting facts:
    • ALEs are required to furnish Form 1095-C to each of its full-time employees by March 2, 2018 (new extended deadline). 
    • ALEs must file Forms 1095-C, accompanied by the transmittal Form 1094-C, with the IRS no later than February 28, 2018 (or April 2, 2018, if filing electronically). 
    • Self-insured ALEs must also report via Forms 1094-C and 1095-C. 
    • ALEs that file 250 or more Forms 1095-C must file them electronically.
         ALEs can find a complete list of resources and the latest news at the IRS’s Applicable Large Employer Information Center.


    Lessons Learned from the 2015 Reporting Filings

    After having reviewed the IRS 226J letters (https://www.irs.gov/individuals/understanding-your-letter-226-j) that were sent to employers who were assessed a penalty under the Employer Shared Responsibility provisions for reporting year 2015,  and having discussed such reasons with reporting industry experts, here are some of the reasons for the penalties: 
    • Employers who have utilized reporting companies who do not interact with the accounting or data management personnel of the employer, have seen a greater instance of errors due to incorrect or incomplete data being submitted.
    • Reporting vendors who do work closely with their clients to assess and determine information being submitted for 1094/1095 forms are less likely to have inaccuracies on their forms and indicator codes. This greatly decreases the likelihood of penalties being levied against the employer.
    • Line 21 and 22 of form 1094-C was often checked incorrectly or simply left blank. This occurred due to missteps by both employers and vendors alike. These mistakes often triggered the (A) tax penalty for employers. 
    •  Another common error related to line 22 (A) was whether or not an employer could utilize  the Qualifying Offer Method”(QOM). In order to be eligible for the less burdensome reporting reserved for the QOM, the below criteria is needed. https://www.irs.gov/affordable-care-act/employers/questions-and-answers-about-information-reporting-by-employers-on-form-1094-c-and-form-1095-c
      • A Qualifying Offer” is an offer that satisfies all of the following criteria:
        • It is an offer of minimum essential coverage that provides minimum value;
        • The employee cost for employee-only coverage for each month does not exceed 9.5% (as adjusted) of the mainland single federal poverty line divided by 12; and
        • An offer of minimum essential coverage is also made to the employee’s spouse and dependents (if any).
    • Line 22 (D) was also a frequent mistake, incorrectly indicated by employers or vendors. Line 22 (D) deals with the 98% Offer Method, which allows an employer to forego tracking or counting employees full or part-time status, as long as they offered qualified coverage to at least 98% of their employees. 
    • Part III of the 1094-C form had reporting problems related to whether minimum essential coverage was offered or not, and what months the offers were made. Many employers used the wrong indicator codes and were penalized, even when they had made correct offers of coverage.
    • Not all penalties that were incurred by employers were the fault of the employer, but by the IRS themselves. The IRS sent many employers 226J letters with penalties for not offering Minimum Essential Coverage (MEC), when in fact the employer had properly offered MEC.

    What to Watch for in Reporting Filings for 2017 and Beyond

     If utilizing a reporting vendor it is important for employers to work closely with their vendors to ensure that the data the vendor has is accurate and that the boxes on the forms are being marked correctly. If an employer is doing their own reporting, it is highly recommended that they seek the assistance of a tax professional or other reputable reporting vendor.
    We also highly recommend that employers maintain all the documentation from previous years used in their reporting, including all forms and transmission reports, so in the event of an Appeal with the IRS, they can offset incorrect penalties in a timely manner.
    ESC is committed to helping its clients remain in compliance with all of their responsibilities and duties under the ACA and other regulatory obligations. If you would like assistance on your reporting, we suggest that you contact a reporting specialist. If you decide that you need an outside reporting resource, we recommend our integrated partner, StaffACA https://staffaca.com/.
    ESC and its affiliates do not provide reporting, tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for reporting, tax, legal or accounting advice. You should consult your own reporting, tax, legal and accounting advisors to ensure you are in compliance with all the regulatory and legal issues that govern your business. 


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