Keep the Evidence
Keep the hours report, the status list and the notices. The same file supports the 95% offer test and the next year’s forms.
The three things to know.
What to Keep
Hours data, the method used, the status list, the offers and waivers and the dated notices.
One Place
A single dated location, with access for the people who prepare the forms.
Retention
Keep records at least as long as the relevant limitation period. Ask your tax advisor how long that is for you.
Sources: 26 U.S.C. § 4980H. General information, not legal advice.
A worked example.
An Audit File in One Folder
An employer stores the hours report, status list, offer letters, waivers and notice dates for each cycle in one dated folder, with read-only access for the people who prepare the forms.
What the Rule Produces
When the IRS asks about a month two years later, the employer produces the folder the same day. The file shows who was offered coverage, when and why.
Four steps to apply it.
1. Create the folder
One per cycle.
2. Add the data
Hours, status and offers.
3. Add notices
Dated copies.
4. Restrict access
Protect it from edits.
Where it goes wrong. Keeping evidence in several inboxes and shared drives.
The questions that come up next.
Can a vendor keep these?
Yes, but you remain responsible for them.
What about paper waivers?
Scan them and store them with the status list.
What if we are audited?
The file is the answer. A clean file shortens the process.
What should be in the file?
Hours data, the method used, the status list, the offers and waivers and the dated notices.
Can we keep it electronically?
Yes, if it can be produced on request.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Who counts as a full-time employee under the ACA?
The short answer: an employee who averages at least 30 hours of service per week, or 130 hours in a calendar month.
Do we have to use the look-back method?
The short answer: no.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
Talk it through with someone who runs this every year.
We help you choose the design, document it and reconcile the hours before the numbers reach your reporting.
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