In the United States, the Affordable Care Act (ACA) requires employers to inform the IRS of the health care insurance status of every covered employee and to provide employees and their dependents with the forms necessary for filing their annual Federal tax returns.
Employers of any size that sponsor a self-insured health plan providing minimum essential coverage must provide employees and their dependents the IRS Form 1095-B and file the forms with the IRS. Employers with 50 or more FTEs with a health plan must provide a Form 1095-C. The IRS filings require transmittal forms 1094-B or 1094-C, respectively.
SAP provides all the necessary tools for tracking and reporting, and provides updates when regulations change. Keeping up with SAP OSS Notes as well as adhering to a few good practice tips will help you stay in compliance.
New Reporting Deadlines
Reporting deadlines have changed as of the 2016 tax year. They are much earlier than in prior years.
Penalties for noncompliance can be severe, but by following the guidelines and keeping up with updates, you can eliminate the risk. Let us share the lessons we have learned in helping clients to implement ACA configuration in SAP and to manage compliance.
1. Keep track of SAP OSS Notes
SAP is responsible for delivering updates and keeping you informed of regulatory changes. This is done via communication through OSS Notes as shown in Figure 1.
Keep track of the updates applied to the system and apply all changes in OSS notes in the correct order. Figure 2 shows the additional manual steps that need to be done after applying the note. Figure 3 shows the previous OSS notes that serve as prerequisites to changes in the current OSS.
2. Keep benefit plans up to date
Incorrect benefits dates can create problems that are difficult to untangle. Among these problems are the inability to accurately report benefits related data to employees and the IRS. Always keep your benefits configuration up to date and check them carefully before you begin your tax reporting procedures.
3. Use all of the available features for configuring ACA
The Features in SAP ACA configuration exist to help you remain in compliance and to produce your forms and reports efficiently and correctly. For example, enter all the attributes of the plan configuration as shown in in Figure 4 to ensure line 14-16 in the 1095-C form is correct.
SAP also added a new functionality to this component where a user can manually assign the month when the plan starts. That information is required on Form 1095-C.
Figure 5 shows the status of the ID related to the ACA run›. The user can update the status of the Run ID for the ACA process. By updating the status, users can keep track of the business stage in completing the
4. Keep configurations simple
Keep configuration related to ACA as concise as possible. Minimize feature trees to reduce processing overhead. You may not notice a slowdown when you are processing reporting for a few hundred employees, but when the number is in the thousands, complexity will create noticeable bottlenecks.
These two examples illustrate what we mean by concise configuration. Figure 6 shows a feature tree configuration that requires a 2-step logic process that determines the country and then the city to determine an output value. Figure 6.1 is an example of a simpler configuration that will reduce processing time and possibility of runtime errors.
We hope these guidelines help aid you with a trouble-free ACA reporting experience. If you have questions, please feel free to contact us.
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