The penalties for not complying with the Affordable Care Act’s (ACA) Employer Shared Responsibility provisions and other requirements are daunting, but proactive employers that take the right steps can protect themselves.
The ACA has added numerous requirements for employers and individuals. Your company may have to gather information from various computer systems in order to comply with the law. Even worse, you could be assessed steep penalties if you don’t follow all of the complex rules. We can assist with these requirements in many ways.
HEALTH COVERAGE OBLIGATIONS AND TRACKING
Employers with 100 or more full-time employees (including full-time equivalents, or FTEs) aren’t qualified for transition relief in the form of a one-year delay and must offer minimum essential coverage to 70% of full-time employees and their dependents in 2015. If even one full-time employee receives a premium tax credit, employers are exposed to a potential tax assessment of $2,000 per full-time employee.
By 2016, employers with 50 to 99 full-time employees (or FTEs) will need to insure them.
From an employer’s standpoint, you absolutely need to track offers of coverage — especially if employees decline the offer. Keep waiver forms as documentation from the employees to certify that you made coverage available that met the qualifications and that the employees didn’t elect coverage. Then, they aren’t qualified to obtain a tax credit.
To stay in compliance, employers must answer these questions and then act:
- Is your business an applicable large employer subject to the shared responsibility penalties — or are you just required to report?
- Who are your full-time employees or FTEs — in other words, the employees who put you at risk for penalties if they aren’t offered adequate coverage?
- Does the health coverage you are offering meet minimum essential requirements and actuarial minimum value requirements, and is it considered affordable on an employee-by-employee basis?
SERVICES OFFERED BY OUR FIRM TO HELP YOUR ORGANIZATION COMPLY
We can help you stay in compliance with the ACA with the following services:
1. File Forms 1094 and 1095. Applicable large employers (those with more than 50 full-time equivalent employees based on the previous calendar year) must file annual returns with the IRS and provide employees a copy of these statements. These forms are due to be filed in early 2016 for 2015 coverage.
The filing requires monthly tracking of benefits that are offered to full-time employees. Your business can help avoid expensive penalties by using our ACA compliance services that include filing Form 1094 and 1095.
2. Prepare ACA Information Reports. We can provide data that will enable you to identify the total number of full-time employees and full-time equivalents at your business, as well as provide calculations that shows your health care coverage is affordable as defined by the ACA.
3. Calculate Penalties. Employers that have a certain number of full-time equivalent employees are liable for penalties if they don’t comply with the requirements. We can calculate the penalties for not providing insurance and the penalties for not providing health care coverage that is considered affordable or that meets a minimum essential threshold.
4. Distribute Notice of Exchanges and Subsidies. Almost all employers must now give a Notice of Exchanges and Subsidies to each employee. It doesn’t matter if the employees are full-time, part-time or are enrolled in your health care plan. The reason for the Notice is to inform employees about the Health Insurance Exchanges (or Marketplaces) and the possible federal subsidies they may be entitled to for the year. We can provide you with U.S. Department of Labor approved notices to give to employees including:
- Notices for employers that offer health insurance, and
- Notices for employers that don’t offer a health insurance plan.
5. Assist with W-2 Reporting of Employer Health Costs. The ACA requires certain employers to report the cost of coverage under employer-sponsored group health plans. This reporting is done on W-2 forms. Reporting the cost of health care coverage on the Form W-2 doesn’t mean it is taxable. The reporting is for informational purposes only and is designed to provide employees with consumer information on the cost of their coverage.
We can assist with this reporting, which is currently:
- Mandatory for employers with 250 or more W-2 forms.
- Optional for employers with less than 250 W-2 forms.
You need to supply the appropriate reporting codes, which flow to the required W-2 reporting boxes. Certain types of coverage (such as major medical) currently must be reported, while other types are optional or don’t need to be reported.
6. Process Medical Loss Rebates. The ACA requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement — known as the Medical Loss Ratio. It also requires them to issue rebates to enrollees if this percentage doesn’t meet minimum standards. Under the Medical Loss Ratio, insurance companies must spend at least 80% or 85% of premium dollars on medical care, with the review provisions imposing tighter limits on health insurance rate increases. If insurance companies don’t meet these standards, they must provide rebates to their customers.
Rebates could be issued by the insurance company in the form of reduced insurance premiums annually, given as cash to your company, or as cash to your employees.
If your company provides pre-tax contributions to your employees for health insurance and you receive rebates in cash (rather than in the form of reduced premiums), you’ll generally need to distribute these rebates to active employees participating in the health insurance plan.
There are a couple ways to provide the reimbursements and there are tax implications. We can assist with the details of these rebates.
7. Assist with Benefit Plan Administration Offerings. We can provide services to administer employee benefits, while keeping your business in compliance with the ACA and other laws that are involved. For example:
- We can handle benefits enrollment, taking into account employee eligibility, dependent coverage and qualifying life events (such as marriage, divorce and the birth of a child).
- We can perform required COBRA services for employees who lose their health care benefits and must be offered elections to continue coverage.
- We can help you and your employees comply with the limits on contributions to flexible spending accounts (FSAs) imposed under the ACA.
We can assist with employees’ acknowledgments through documents such as a Summary of Benefits and a Notice of Exchanges and Subsidies.
The ACA has placed considerable burden on businesses. Please contact us for more information on the ACA and payroll related reporting requirements. Contact CertiPay for more info on our services: Payroll, Human Resources, ACA, Compliance, Benefits Enrollment, and Time and Attendance solutions.
