Million-dollar question: How far do you think the IRS and Department of Labor will push for audits and penalties to finance subsidies?
Where IS that crystal ball when you need it?
Obamacare is uncharted territory, and with it being an election year, employers are still hoping it will all go away…but it won’t, really. Some fundamental principles will always remain, regardless of how the ACA looks today. At some point audits will happen and penalties will be imposed. Who? How? When? How much? More million dollar questions.
What if your client is the one audited? The Federal Government can seem arbitrary, but then it happens. The IRS arrives, takes up immeasurable time, resources and money to perform what seems like an archaeological dig. Maybe they won’t get the employer for what they are initially looking for, but maybe they find something else – and once they’ve finished washing their hands of them, the State might come.
The struggle is real, brokers are fatigued, and what you really want to know is, “What do I tell my clients?”
Short of that crystal ball, here’s your answer.
The feds will probably go for the low hanging fruit first with very large companies – think large retailers and chain restaurants. Then it might trickle down to other large companies of 50 FTEs or more. We’re talking about businesses like pizza parlors, retail stores and alike. These are companies we generally refer to as small businesses, but they are considered large employers under the law. You can’t always exclude for part time, and you can sometimes exclude for seasonal employees – it’s a limited and complicated formula that a lot of companies don’t understand.
Employees handling the role of HR within these 50+ FTEs frequently wear more than one hat – compliance officer, payroll, HR, benefits, workers comp, EEOC complaints, etc. These tasks often fall under one person as opposed to an entire HR department, and the level of complexity can make up a full time job in and of itself. When things fall through the cracks – and they do – companies are forced to take on additional expenses to try to address problems, and it can affect growth.
It’s one thing if there are 8,000 employees and an entire department to handle compliance – but with 50 FTEs, no, not usually the case. And when it comes to the DOL? All it takes is one complaint from a disgruntled employee and, before you know it, the DOL reports that complaint to the IRS and you’ve got an army on the doorstep.
Before your clients panic, remind them that there’s a big gap between fear and practicality – so let’s all take a collective deep breath and some practical steps to prepare in the event of an audit. Share this helpful article: ACA Audit Preparation Outline. In the end, it’s like going to the dentist for preventive check-ups. No one likes to go, but you’ve got to do it if you want to help avoid that root canal.
Corbin Granger is the Compliance Manager at TFA Benefits. With over 16 years of experience in employee benefit compliance, Ms. Granger provides compliance and consulting services to brokers and employers on health insurance and employee benefit administration. Corbin’s areas of expertise include ACA Compliance, HIPAA, potential ERISA issues and Section 125 plans.