1. Is the Software a Standalone Solution, or is it Tied to a Benefits Platform?
If the 1095-C platform is standalone, administrators will have to manually compile all benefits and coverage information into a spreadsheet and upload it to the filing software.
Depending on the system, the software may generate PDFs of the IRS forms, provide some reporting functionality, and e-file the documents as well as mail them to employees. These systems are often available through tax preparation providers.
When the 1095-C requirements were new—they became mandatory for the 2015 tax year—and employers were in a time crunch to become compliant, a standalone strategy may have made sense. However, most groups have realized that manually pulling coverage data is a lot of work on an annual basis, especially if you have this information already compiled in a benefits administration platform.
A better option is to use a 1095-C solution that is tied to a benefits system, which already stores all the relevant information. Even better, the most robust solutions are tied to an all-in-one human resources information system (HRIS) like BerniePortal.
Many benefits systems are provided through insurance brokers, which provides another level of support. Because the entire 1095-C process centers around benefits, it’s likely that any questions you have will be benefits-related, and brokers are in a natural position to assist with these issues.
2. How Closely Tied Are the Systems?
The next question is how coverage data is communicated from the benefits administration platform to the 1095-C solution. Ideally, the systems are one and the same, and the Form 1095-C functionality is built natively, allowing benefits information to auto-populate in the IRS forms.
The alternative is communicating this information via a file feed or through a third-party integration, which poses a greater risk for errors.
3. Does the Form 1095-C Vendor Handle Mailings and E-Filings?
Last, be sure to check that the 1095-C can handle form distribution and filing. E-filing with the IRS isn’t as easy as simply uploading documents—vendors actually have to obtain special approval to e-file with the IRS, and receive what’s called a “Transmitter Control Code” or “TCC.” When comparing 1095-C solutions, ask whether the system has its own TCC.
Ultimately, administrators will want to consider how much of their time is currently spent on the Form 1095-C process and whether that can be minimized by using a system that is connected to their benefits platform.