Unlike the 1967 film, Cool Hand Luke, where the prison warden delivers the above line shortly after giving a beating to prisoner Luke (Paul Newman) for making a sarcastic remark, employers may be worried about a beating from the IRS if they aren’t able to communicate with multiemployer health funds or staffing companies.
Under the Affordable Care Act (“ACA”), employers are required to report on the offers of coverage made to their common law employees. Employers have to provide statements to the employees on Form 1095-C and submit them to the IRS. The reporting includes data elements such as the months coverage was offered, the lowest cost premium for self-only coverage for each month, whether spouses and dependents are eligible, and confirmation that the plan is affordable and provides minimum value. The problem is this: if an offer of coverage is made on behalf of a staffing company or multiemployer plan, how will the employer have this information?
For employers participating in multiemployer plans, the rules allow the multiemployer plan to report on the employers behalf as described in Q&A-24 here. However, even if an employer goes this route, the fund will still need certain data elements from the employer, such as the employee’s compensation or the safe harbor that the employer is using to determine affordability under the ACA. So either way, communication is necessary. Additionally, there is no similar rule for staffing companies.
The key for employers is to work with their staffing firms and their multiemployer plans now to facilitate the transfer of necessary information to conduct the reporting. Staffing firms and multiemployer plans may or may not be aware of these reporting rules, or of the scope of data needed for reporting. If they aren’t, they will need some lead time to be able to assemble the data in time for reporting in early 2016. Employers will also need some lead time to integrate the data they receive into their reporting systems.
At the moment, the IRS has not provided any relief for a reporting failure due to the inability to get the information from a multiemployer fund or staffing company. Such relief would be welcome, but it appears unlikely at this point, so employers would be well-advised to get working on this soon.