When it comes to ACA Compliance / Health Care Reform, there is a lot to get right, and perhaps just as much to get wrong. As we draw closer to tax filing time, let’s review seven transition relief rules that IRS provided in the final ACA regulations. They just might help your business comply with the shared responsibility provisions of the ACA.
- ALEs with Fewer than 100 Full-time Employees: If your company is an applicable large employer (ALE), you can still avoid 2015 compliance with the shared responsibility provisions if you have at least 50 but fewer than 100 full-time employees, including full-time equivalent employees. IRS made this transition rule to assist those large employers that did not previously offer coverage or that did not offer affordable, minimum value coverage. Please note that this does not relieve you from the information reporting requirements for 2015. The employer must also certify that the company maintains its workforce and aggregate hours of service and maintains any previously offered coverage.
- Shorter Period for Determining ALEs in 2015: Instead of using the entire 12 months of 2015 to determine whether your company is an ALE, IRS transition relief provides that the employer may choose any consecutive six-calendar-month period in 2014 to determine compliance rather than using the entire 2014 year.
- Offers of Minimum Essential Coverage in 2015: Generally, if an ALE does not offer minimum essential coverage for any part of a month, then the ALE has not offered such coverage for the entire month. Under this relief provision, however, an ALE that offers minimum essential coverage to a full-time employee no later than the first day of April in the first year that the employer becomes an ALE then that will count as an offer of minimum essential coverage for January-March of that year. A special rule applies for January 2015 which provides that if an ALE offers minimum essential coverage to a full-time employee no later than the first day of the payroll period that begins in January 2015, the regulations will treat the employer as having offered coverage for all of January 2015.
- Minimum Essential Coverage for Dependents: In general, an ALE makes a minimum essential coverage offer only if the offer also includes dependent coverage. However, for the 2015 plan years, ALEs meet the coverage test as long as the employer takes steps to offer minimum essential coverage to dependents (and, of course, does not drop dependent health care).
- Minimum Essential Coverage to at least 70% of Full-time Employees (and their dependents): In general, ALEs must offer minimum essential coverage to at least 95% of Full-time Employees. As a limited transition rule, the IRS has issued relief by providing that for each month in 2015, ALEs must offer minimum essential coverage to at least 70% of Full-time employees and their dependents .
- Shorter Period for Determining Full-Time Employees: The act defines full-time employees as any employee who works a minimum of 30 hours per week. The final regulations provide two alternate methods of determining full-time employees: the monthly method and the look-back method as the minimum standards. Employers are free to count more employees or offer coverage under a more generous method than would count under these two methods to avoid a penalty assessment.
- Calculation of Employer’s Shared Responsibility Payment: The final regulations provide that any shared responsibility penalty is payable upon notice and demand. The IRS will assess the penalty and collect it in the same way as penalties under Section 68 of the Internal Revenue Code. The IRS will develop procedures to notify employers that employees have received premium tax credits or the cost sharing reduction. Experts anticipate that IRS will assess the penalties after the filing deadline for the taxpayers to claim the premium tax credits and cost sharing.
To talk more about Affordable Care Act compliance issues, or anything else, please contact us. We look forward to hearing from you soon.