ACA TRACK Knowledge Base

There are certain instances where we need to report employee Leaves to the IRS. The exact coding will vary, depending on whether or not they are eligible for benefits during their leave.

Leave – Keeps Insurance Benefits

If there were no changes to an employee’s coverage while on leave, there is no need to document it on your spreadsheet. List them the same as you would any other employee:

• Job Status: This remains FT, because they are still considered full-time employees during a protected leave.

Leave – Keeps Insurance Benefits, Then Returns Part-time

If the same employee above decided to return to work part-time, you need to note the change in Job Status and Coverage Type. Typically, these employees will become ineligible for health benefits and may be eligible for COBRA, based on a reduction in hours.

• Line 1: This line represents both active employment and the period of leave for which the employee was covered under insurance (since is it not necessary to report covered leave differently).
  • Coverage End Date: This is the day the employee’s insurance coverage ended (because they became VH). In the example above, this occurs at the end of the month. This could also happen immediately, depending on your company policy.

 

• Line 2: This represents the employee’s return to work.
  • Coverage Begin Date: Make sure the Begin Date in line 2 is later than the End Date in line 1. Typically, this will be the next day.

 

Leave – Initially with Coverage, but then Coverage is Lost (COBRA Offered)

There are times when an employee who initially is offered coverage during a leave period may elect to extend that leave beyond their eligibility period. In this situation, the employee may become eligible for COBRA during their Leave period:

• Line 1: This line represents both active employment and the period of leave for which the employee was covered under insurance (since is it not necessary to report covered leave differently).
  • Coverage End Date: This is the day the employee’s insurance benefits ran out (while they were on leave).

 

• Line 2: There are a few unique entries here:
  • Status Begin Date: This is the day the employee began their leave.
  • Job Status: Because the employee is changing Coverage Type, it is now necessary to update their Job Status to “Leave.”
  • Coverage Begin Date: Make sure this date is after the Coverage End Date from line 1. Typically, it will be the very next day.
  • Coverage Type: Enter “COBRA Reduction in Hours” or “COBRA Waived” depending on the selection.

 

 

 Leave – Extends Leave Beyond Coverage Period, Waives Cobra, and Returns FT with Waiting Period

In this more complex example, an employee extends their leave past the protected period, losing coverage. At this point, the employee is offered COBRA, but waives coverage. When they return to work full-time, they are subject to a waiting period.

• Line 1: Represents their FT employment AND the part of leave they remained insured.
  • Coverage End Date: This is the date their coverage expired (while still on leave).

• Line 2: Because the employee extended their leave past the protected period, they lose coverage and are offered COBRA.
  • Status Begin Date: This is the date they first went on leave.
  • Coverage Begin Date: This is the day they were no longer eligible for health insurance coverage (should be 1 day after the Coverage End Date from Line 1).

• Line 3: When the employee returns to work, they enter a waiting period. In this scenario, because they waived COBRA coverage, they have no insurance during this period, so:
  • Plan ID: Leave this field blank.
  • Coverage Type: Use LNAP (Limited Non-Assessment Period).

 

• Line 4: Following their waiting period, the employee is once again eligible for health insurance coverage.
  • Status Begin Date: Since their Job Status has not changed since Line 3 (when they returned to work full-time), use the same date from Line 3.
  • Coverage Begin Date: This is the first day they were again eligible for health insurance coverage. It should be 1 day after the Coverage End Date from Line 3.

 

Next Step: Documenting Terminations (Voluntary & Involuntary)