4 Things to Know Before Submitting For the ACA
One thing most employers can agree on when it comes to the Affordable Care Act: the desire to remain in compliance. Follow these tips to prepare for the reporting deadline.
1. Take your time when completing your information. ACA reports have never been filed before; IRS electronic fillings are due for the first time by July 30. To avoid acquiring any additional penalties, costs, and fines this year, take extra precautions when completing your information.
2. Confirm your business’ employee size before filing. The ACA defines a large employer in 2016 as any employer with at least 50 employees during the prior year that are ACA full-time. This can be deceptive, because not only does a business need to count individuals that each work over 30 hours per week on average, but also consider the accrual of all hours of part-time workers for a FTE equivalent. For example, even an employer with only 35 employees that work 30 or more hours per week may be recognized as a large employer under the ACA, if they have enough part-time employee hours that aggregate hours to 15 full-time equivalent employees (about 1,800 hours per month in this example).
Considering this, many businesses that consider themselves small could fall into the legal definition of a large employer. And as a large employer, the regulatory environment becomes immediately very complex. Large employers under ACA are held to all ACA mandates — as well as the employer shared responsibility mandate. This mandate requires employers to track and measure all employees, make compliant offers of coverage that are both affordable and of value, and report to both employees and the IRS on an annual basis. There are significant penalties for failures of compliance. However, if the business performs its calculation and determines that it does not fall into the definition of a large employer under ACA, there are several things to keep in mind:
• The small business is not required to offer health care coverage, but if it does, it will need to comply with ACA insurance reforms and essential health benefits.
• The ACA offers incentives to small businesses to help them provide health benefits to employees.
• Be sure to confer with your broker on options that will be most cost effective for your business and your employees.
3. Understand “employer shared responsibility provisions” and how they apply to ACA reporting. Many provisions of the Affordable Care Act (ACA) are designed to expand access to affordable health coverage. These include provisions for shared responsibility of employers (a.k.a. the employer mandate) regarding health coverage, coverage to be offered through state-based Affordable Insurance Exchanges (Marketplaces), premium tax credits to help individuals purchase coverage through Exchanges, and other related provisions. The Departments of Labor, Health and Human Services, and the Treasury (the Departments) have developed regulations and other administrative guidance that will respond to questions and assist stakeholders. The employer shared responsibility provisions, contained in section 4980H of the Internal Revenue Code (Code), provide that an applicable large employer (for this purpose, an employer with 50 or more full-time equivalent employees) could be subject to an assessable payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction payment. Generally, this may occur in one of two situations:
a. The employer does not offer its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.
b. The employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan that either is unaffordable relative to an employee’s household income or does not provide minimum value.
The IRS will use the information provided on the 1094 and 1095 information returns to administer the employer shared responsibility provisions of the ACA. The IRS and the employees of a large employer or large employer member company will use the information provided as part of the determination of whether an employee is eligible for the premium tax credit at the Marketplace exchange under section 36B.
4. Stay up to date on the latest details about the ACA reporting deadline. IRS Notice 2016-4 extends the due date for the 2015 Form 1095-B and the 2015 Form 1095-C from February 1, 2016, to March 31, 2016. This notice also extends the due date for filing the 2015 Form 1094-B and the 2015 Form 1094-C from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically. In view of these extensions, the provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements will not apply to the extended due dates.