Here’s the bad news first: the 2009 ACA transition reliefs are ending. As you may know, these reliefs were available in two forms. First, reporting deadlines were generous to allow companies plenty of time. Second, the law exempted businesses with fewer than 100 employees. Both of these allowances are ending this year, and employers, especially small ones, must be sharp and act fast to avoid substantial penalties. The good news is that we now have the inaugural ACA reporting season successfully under our belts and are ready to tackle what’s next!
The new deadlines are as follows:
- Employers must provide Forms 1095-B and 1095-C to employees by March 2, 2017. The forms must indicate month-by-month coverage provided through December 2016. Of course, coverage must be compliant with the essential coverage requirements.
- Paper forms 1094-B, 1095-B, 1094-C and 1095-C are due to the IRS by February 28, 2017. Electronic forms 1094-B, 1095-B, 1094-C and 1095-C are due to the IRS by March 31, 2017. A company with 250 or more employees must file the forms electronically.
- Employers, of any size, that sponsored a self-insured health plan providing minimum essential coverage must distribute Form 1095-B to enrolled employees and file Form 1095-B with the IRS, showing health plan enrollment.
Avoiding the Two Types of Penalties for Non-Compliance
Penalties imposed by the IRS on a non-compliant business are triggered when full-time employees who were not covered seek subsidized coverage through the ACA’s public exchanges. You can avoid penalties by making sure you do not fall into either of these penalty categories. The two types of penalties are (penalties are not deductible):
- Penalty A - No Coverage. This penalty applies to companies who have failed to offer medical coverage to at least 95% of their full-time equivalent employees (and their dependents) for each month of the year (not averaged through the year). Some companies run a risk here due to erroneous interpretation of “full-time equivalent employee.” Contingent workforces such as seasonal, contractual, or variable-hour employees, mergers or acquisitions, multiple locations, or labor from staffing firms may all affect your company’s “full-time equivalent” count.
- Penalty B - Deficient Coverage. Plans offered which do not meet the requirements of affordability, and minimum value will draw a penalty as well. A premium can be no more than 9.66% of the employee’s household income to be considered “affordable”. Minimum value means the plan covers 60% or more of an employee's medical expenses.
A Note about the Shared Responsibility Mandate
The phase-in period of the ACA’s shared responsibility mandate—also known as "play or pay"—ends this year. From now on, all organizations with 50 or more full-time equivalent employees must offer adequate insurance to at least 95 percent of their full-time employees to avoid penalties.
Assess Your Risk
Do you have adequate staffing and IT capability to handle the calculating, documenting, and reporting necessary for ACA compliance? Are you sure you understand what constitutes a full-time employee and what factors might affect your count? If you are unclear on any of these factors, don’t wait another day to call us. We are here to help