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The Affordable Care Act (ACA) employer mandates and deadlines are putting plenty of fear, worry and doubt into those who must comply with reporting requirements. Applicable Large Employers (ALEs) should be especially aware of their ACA obligations to employees and the IRS.
Since the ACA became a law, the IRS has managed over 40 provisions regarding implementation of ACA.
Perhaps the most pressing from an employer’s viewpoint is play or pay. Large employers (50+ FTEs) who do not offer coverage for all of their full-time employees, offer unaffordable minimum essential coverage or offer plans with high out-of-pocket costs could face tax penalties.
The employer would also be subject to a tax penalty if there is at least one full-time employee certified as having purchased health insurance through an exchange and was eligible for a tax credit or subsidy.
Employer fines imposed for ACA noncompliance are referred to as employer shared responsibility payments. The full details of who will have to pay, how much to pay and under what circumstances is pretty complicated, but rest assured those fines can be substantial. The IRS official Q&A about this contained 56 entries when it was updated as of May 20, 2015.
ALEs should have been recording and compiling detailed, monthly information as of January 1, 2015, in order to meet filing requirements. Some required data includes:
Required reporting will be done via four IRS forms:
ALEs will file Forms 1094-C and 1095-C, while the coverage provider or self-insured plan sponsor has the legal obligation to furnish forms 1094-B and 1095-B to the plan participants.
Full-time equivalent (FTE) employees must receive their completed forms by February 1, 2016 (due to January 31 falling on Sunday). The paper reporting forms filed with the IRS must be sent in by February 29 (due to leap year) or March 31 for electronic filing. Employers should already be implementing a solution that can manage ACA data and report compliance.
The challenges of ACA compliance can be met with the right solution that manages employee data, time and attendance, HR, payroll, and benefits so an employer is able to quickly review data. If you use outside assistance, make sure they provide a defined project plan to ensure your compliance.
The bottom line? Be ready – you have to comply!
Can you see what’s coming for employee health care reporting? The Affordable Care Act (ACA) is burdensome and complex with changes to many different laws or sections of our tax code. With nearly 100 provisions since its enactment, it seems to continually impact employer responsibilities and reporting.
Determining if your company is an applicable large employer (ALE) is just one of the ACA requirements. An employer with more than 50 full-time (or an equivalent combination of full-time and part-time) employees is an ALE. An ALE must offer affordable health plans that provide at least a minimum level of coverage to their full-time employees (and their dependents), or possibly be subject to the employer shared responsibility penalty. Though no employer shared responsibility payments were assessed for 2014, employers must use their 2014 workforce information (e.g., number of employees, hours of service) to determine their criteria for 2015, since the number of employees is a calculated value of full-time and part-time employees over the last 12 months.
The ACA also amended the tax code, adding sections 6055 and 6056. ALEs are required to file information returns with the IRS and provide statements to their full-time employees about health insurance coverage offered by the employer.
|Section 6055||Section 6056|
|Insurers and self-funded plans||Applicable large employers|
|Enforce the individual mandate||Enforce the employer mandate|
|Show all individuals who are covered||Show who has been offered coverage|
|Form 1094 B transmittal to the IRS||Form 1094 C; ALE’s transmittal to the IRS|
|Form 1095 B notice to the individual||Form 1095 C; ALE’s notice to the employee|
As you can see, it’s critical that all your workforce data is in one location, making it easy to track critical employee and dependent data needed for required ACA reporting:
Highflyer HR’s Human Capital Management (HCM) technology that helps you determine your ALE status and maximum waiting periods for medical enrollments, in addition to running applicable self-funded or fully insured reports. Highflyer HR also provides appropriate filing for companies that fall under the exception reporting for this year. And if you’re curious about potential penalties due to the non-affordability of offered plans, Highflyer HR can show you proactive estimates.
Highflyer HR makes adhering to ACA requirements easier and more efficient. With expert support from our staff, iSolved makes sure you have all of the necessary data collection, forms and procedures so you don’t lose sight of vital compliance issues.
Contact us at 844.398.7800 for more about Highflyer HR and health care reporting compliance.