Your starting point for questions about the Affordable Care Act
It’s estimated that up to 90% of employers are not prepared to meet the significant reporting requirements the Affordable Care Act (ACA) has imposed. Employers that do not have a solution for collecting and managing the necessary employee and benefit data to satisfy Section 6055 and 6056 reporting requirements run a significant risk for incurring reporting penalties and ACA excise taxes.
Companies that employ 50 or more full-time equivalent employees are defined as an Applicable Large Employer (ALE). The employer mandate requires all ALEs to offer minimum essential coverage that is both affordable (9.5 percent income) and provides minimum value (policy pays 60 percent of the costs) or face a penalty called the Assessable Payment (play or pay). This coverage must be offered to all full-time (FT, defined by total hours of service) employees and is determined by using either a monthly or look-back measurement period. The employer mandate applies to ALEs of 100 or more in 2015 and 50 or more in 2016.
If ALEs offer FT employees coverage deemed unaffordable (at least 9.5 percent of the employee’s income for the least expensive employee-only, compliant plan) or doesn’t provide minimum value (the plan’s share of total cost of benefits under the plan is less than 60 percent), the employers may face a penalty of $3,000 times the number of FT receiving a subsidy for exchange coverage. Employers who file incorrect forms may be subject to a fine of $50 per form up to 250k annually.
In order to meet the 2016 reporting requirements, employers should already be compiling and analyzing data now to determine coverage and affordability. Required data collection includes: