ACA Compliance Reports Due Soon – Is Your Company an ALE?
The Affordable Care Act (ACA) and its bundle of affiliated laws are changing how healthcare is delivered in the United States. To provide every American with access to reasonable, affordable health care services, the federal government has established mandatory health coverage practices for employers across the country. In early 2016 (February 28 for paper filings; March 31 for electronic filings), reports are due regarding the employer’s shared responsibility and certification of compliance for 2015 for Applicable Large Employers. As well, the IRS recently released the 2015 5 Health Care Information Reporting Form, which are believed to be the final versions of these documents.
To be prepared for timely submission of those ACA Information Returns (AIR), and to ensure that those returns demonstrate compliance with the laws, any company that might qualify as an Applicable Large Employer should be reviewing their present health care coverage position now.
Applicable Large Employers (ALE – those with an average of more than 50 employees in the calendar year) are subject to the employer shared responsibility provisions and the employer reporting provision for their offers of minimum essential coverage to their employees. Note that there is transition relief from these provisions to ALE’s that qualify.
1. Employer Shared Responsibility Provision:
Since only ALE’s are subject to this requirement, the first task is to establish if your company is one.
To Determine Your Company’s Eligibility as an ALE:
You should consult with your corporate attorney or CPA to confirm these details.
A. Establish the number of your full-time employees or equivalents:
* Include all employees such as part-time, seasonal and variable employees to establish the number of full-time employees you had in each calendar month;
* Count the number of full time or full time equivalent employees in each month for 2015 , or, to determine employer obligations for 2015, the number of full-time employees for any six consecutive months in 2014.
If your total full-time employee count for each of the months in the periods identified is more than 50, then your company is an Applicable Large Employer.
B. Ensure Minimum Essential Health Coverage is Offered:
As an ALE, be sure that you are offering minimum essential health insurance coverage – coverage under an employer-sponsored plan – to your employees and their dependents. The coverage offered must meet the ACA’s minimum-value value of 60% – the plan must pay 60% of the total cost of the benefit. The employee’s share of the cost must be affordable – equal to or less than 9.5% of their family income on premiums.
Failure to offer minimum essential health care insurance coverage carries a penalty of $2,000 per year per full-time employee not who was not offered such coverage. Failure to offer affordable health care coverage carries a $3,000 per year penalty per employee who receives a federal subsidy.
2. Employer Reporting Requirement:
For the calendar year 2015, each ALE must report the following data:
– Certification that the entity provide minimum essential health care coverage for all eligible full-time employees and their dependents;
– The length of the waiting period between hiring and eligibility of each full-time employee;
– The monthly premium value of the lowest cost premium option;
– The employer’s share of the costs, and
– the number of full-time employees employed each month.
Executives and other highly compensated employees cannot receive better health coverage benefits, eligibility terms or employer contributions to the health care plan than other employees. Other restrictions prohibit offering different health care coverage terms to employees based on the number of years in which they’ve been with the company, their age or compensation level.
The transition to the ACA has been challenging, as the law changes decades-old health care funding systems. However, since its inception, millions of Americans now have health care coverage for their most basic needs, and the costs of uninsured health care services to the general public should go down. Coming into compliance with the laws has frequently caused internal challenges as well, and corporate entities find economical ways to provide this safety net for their empluyees while maintaining profitability. For assistance with your transition, contact us.