Start Planning your ACA Compliance for 2016: Employers of 50 – 99 Employees Are Now Included in the Law
On Tuesday, March 23, 2010, President Obama signed the Patient Care Protection and Affordable Care Act into law. Over the past year or so we have been providing information of value to employers, both large and small. Employers between 50-99 employees will now have to make the decision in 2016 whether to pay or play.
The company resources needed to manage the offer of insurance, the on-boarding, the government reports, and the documentation can be extensive and confusing to companies of 50-99 employees. Know the law to avoid penalties to your company.
Simply speaking, without going into extensive detail, there are two penalties that can affect your company.
Penalty “A” is the more significant of the two penalties. This requires you to offer employees health insurance that is affordable (no more than 9.5% of their annual income). If you do not offer insurance and/or it is not affordable, your fine is $2500 times 90% your total employees. So, if you have 99 employees, the penalty is 90 times $2500 or $235,000.
Penalty “B” is for any employee that is not offered the essential coverage. At the first signing of the Affordable Care Act into law, hospital coverage was omitted as essential. It was later added as essential. So, if an employee goes into the hospital and your policy does not cover inpatient coverage, you will be fined $3,000 for that employee under penalty “B”.
2016 – The New Affordable Care Act Challenge – Government Reporting
Who, When and Where
Forms 1094-C and 1095-C are required to be completed by all employers with 50 or more full-time equivalent employees. This must be filed by any employer subject to the employer mandate. Form 1094-C is the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. Form 1095-C is the Employer-Provided Health Insurance Offer and Coverage for Employees. Importantly, reporting for 2015 is required even if the employer is not subject to the mandate until 2016 (generally, employers that average between 50 and 99 full-time equivalents in 2014). There is a code provided to indicate that the employer qualified for the additional transitional relief.
A form must be filed for each employee who was a full-time employee of the employer for any month of the calendar year. If a full-time employee works for more than one employer that is a member of the same aggregate applicable large employer, that employee must receive a separate Form 1095-C from each employer. Employer sponsored, self-insured health plans must also complete Form 1095-C, Part III, for any individual, including employee family members, who enrolled in the self-insured plan. In addition, self-insured plans must complete Form 1095-C Part I and II for any employee enrolled in the health plan to include whether or not the employee is a full-time employee. The draft instructions include an explanation that an employee in a Limited Non-Assessment Period is not considered a full-time employee during that period. They include instructions on how to go about issuing a corrected Form 1094-C and 1095-C, along with the method to which an employer may request a 30-day extension to provide Form 1095-Cs to their employees.
The return and transmittal must be filed with the IRS on or before February 28 (March 31 if filed electronically) of the year following the calendar year. For instance, the first reports will be due the beginning of 2016 for the 2015 calendar year. If the due date is on a Saturday, Sunday or legal holiday, it must be filed by the next business day. The instructions clarify that Form 1095-C must be furnished to employees on or before January 31. Statements must be furnished on paper by mail, unless the recipient has consented to receive it electronically.
The 2015 draft instructions also outline the penalties, generally up to $250 per statement with an annual cap of $3,000,000 unless the failure to provide a statement or correct statement is intentional, at which point the penalty can increase substantially.
For more information, contact Roy Fazio at 856.667.5129