Please prove your ACA coverage — you have 20 seconds to comply!
Tuesday June 23rd, 2015
Estimated time to read: 2 minutes
The Affordable Care Act (ACA) employer mandates and deadlines may not be as severe and scary as the famous haywire robot test scene in RoboCop, but aspects of the law are putting plenty of fear into those who have been paying attention to its implementation requirements. Repercussions can be much worse for Applicable Large Employers (ALEs) who have ignored or remained ignorant of ACA obligations to their employees and the IRS.
Among 46 new IRS ACA enforcement powers listed by the Galen Institute are two of particular interest to ALEs:
Employer Mandate Tax that imposes a penalty on 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, and
- Have at least one full-time employee certified as having purchased health insurance through an exchange and was eligible for a tax credit or subsidy.
Large Employer Information Reporting requires information reporting of health insurance coverage information by large employers (subject to IRC 4980H) and certain other employers.
The IRS refers to the employer fines imposed for ACA noncompliance 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.
Data, data, data
Though forms won’t have to be filed until 2016, ALEs should have already been recording and compiling detailed, monthly information since January 1, 2015. Employee data required for collection includes:
- Federal Employer Identification Numbers (FEIN) within a controlled group
- Total employees
- Total full-time employees
- Total months covered
- Validation that minimum essential coverage was offered, affordable and met the minimum value requirements
- Personal information, including Social Security Number and birth date
Forms follow function
The IRS forms used for reporting the data are 1094-B (Transmittal of Health Coverage Information Returns), 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns), 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage). The ALEs are responsible for filing 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 reporting forms filed with the IRS must be sent in by February 29 (due to leap year) for paper filing or March 31 for those sent electronically. These deadlines will be here before you know it and you should already be implementing a solution that can manage ACA compliance.
As you can see, there is a lot to manage in order to be in compliance with the ACA. The challenges can be met with the right solution that should manage employee data, time and attendance, HR, payroll and benefits so an employer is able to quickly review data and determine compliance. As a reminder, if you obtain vendor assistance, they should provide a defined project plan to ensure your compliance.
The message for employers is to immediately make sure you and your staff are up to speed on exactly what should be done now and in the near future about the applicable ACA provisions. “You have … to comply!”
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