FAQ: ACA Year-End Process

Q: Why does an employee have a 1E Line 14 but a blank Line 16 code?

If an employee has been offered a plan, but Line 16 is blank, it means that the plan was not affordable based on the rate of pay. It can also mean that the offer was not made at the start of their standard stability period. This will be a 4980H (b) risk.

Q: Why is Line 16 2B even though the employee had coverage for the rest of the month?

For Fully Insured groups:

When an employee is terminated mid-month or before the end of the month, a 2B will emerge because they are not considered FT every day of that month. The IRS only requires districts to show coverage during employment. Termination dates are based on the last payroll.

For Self-Insured groups:

Part III will show coverage for the entire month even if terminated before the end of the month. If you want to show coverage for the next month after termination, please reach out to your assigned ACATR specialist. Termination dates are based on the last payroll uploaded to the SET SEG Member Portal.

Q: Why is Line 16 2D even though the employee had coverage starting on their hire date?

If the hire date is not at the start of the month, then it will be a 2D code. In ACA, the offer of coverage must start on the first of the month for it to be considered effective for the whole month.

Q: What is the 4980H(b) penalty? 

A 4980H(b) penalty occurs when a qualified employee is offered coverage, but it is not affordable. It can also apply to the 5% excluded full-time employees from a 4980H(a) penalty. It’s considered a small penalty, as the district will only get B risk if an employee applies for coverage on the marketplace and receives a subsidy. For example, if you have a retired employee, you know it’s unlikely they will go to the marketplace because retired employees get coverage from the Office of Retirement Services. Another example would be an employee who is qualified, but on their spouse’s coverage, as they will most likely receive a subsidy, but not apply for benefits on the marketplace.

Q: How can you see if a monthly benefit cost is affordable? 

To calculate if the plan will be affordable based on rate of pay, please use the equation below (an hourly rate of $24.33 was used for this example):

Maximum Monthly Premium = $24.33 (Hourly Rate of Pay) x 130 Monthly Hours

= $3,162.90 (Gross Pay)

$3,162.90 (Gross Pay) x 9.02% (Percent of Gross) * =$285.29 Maximum Monthly Premium

*Percent of Gross changes annually based on the IRS

Q: Why is an employee’s hire date different in SyncStream?

The hire date in SyncStream is based on the first payroll for a new hire. Once the first payroll is in SyncStream the hire date gets backdated about 14 days. This helps districts with compliance because there are several situations where an employee is hired, but they don’t start working right away. The IRS allows us to use payroll as a hire date indicator.   

Q: Why is a rehired employee showing at risk?

If an employee is rehired within 26 weeks, they will continue their previous measurements/qualifications as if they never left employment.

Q: I switched an employee from FT to PT and dropped coverage. What happens now?

There will be a 3-month period where the employee will be at risk if coverage is dropped. The system will automatically look at the employee’s hours to see if they qualify for coverage once marked PT. If the employee was marked FT but was not working FT hours, they will not be at risk. 

Line 14 Codes – Offers

Line 16 Codes – Safe Harbor Relief