As employers prepare for the coming year, assessing ACA preparedness and compliance should be added to the list. 2015 will welcome in new employer shared responsibility and reporting requirements.
Most employers are likely familiar with their responsibility for providing health benefits, but many may be caught off guard by the monthly tracking that needs to occur to submit year-end reports for 2015.
Employer Shared Responsibility
Starting in 2015, employers with 100 or more full-time equivalent employees (FTEE) are required to provide health benefits to at least 70% of their full-time equivalent (FTE) employees. By 2016, all businesses with 50 or more FTEEs will be required to provide health benefits to at least 95% of their FTE employees.
Employer Shared Responsibility Penalties (Pay or Play). Effective for plan years beginning on or after January 1, 2015, employers may incur fees for non-compliance including:
Per employee fee of $2,000 if health insurance is not offered (first 30 full-time employees are exempt); OR
If at least one full-time employee receives a premium tax credit because coverage is either unaffordable or does not provide minimum value (meaning it covers at least 60 percent of total costs), the employer must pay the lesser of $3,000 for each of those employees receiving a credit or $750 for each of their full-time employees total
Starting in 2015 many employers will be required to start tracking information in support of IRS reporting requirements under IRS Code Sections 6055 and 6056.
Section 6055 is intended to serve as verification that the individual has minimum essential coverage for purposes of enforcing the ACA’s individual responsibility requirements. Reporting requirements will pertain to covered individuals along with the type and period of coverage provided. Unless an employer is self-insured or a multi-employer group, tracking and reporting responsibilities for Section 6055 will fall on the insurance provider.
>> Review sample drafts of Forms 1094-B and 1095-B for Section 6055 reporting.
Section 6056 is intended to enable the IRS to determine whether an employer owes a shared responsibility payment under Code Section 4980H and whether an employee is eligible for a premium tax credit on a Marketplace Exchange. Starting in 2015, large employers (with at least 50 FTEs) will be required to track monthly data in support of annual reporting (which will be due in February or March of 2015). Information tracked will likely include:
Number of full-time employees
Employee information (names, addresses and Social Security numbers of each)
Healthcare coverage information (whether the employer coverage offered provided minimum essential coverage, minimum value, met the 9.5% affordability test, if and when coverage was offered to full-time employees and their dependents, and the employee’s share of the cost for the lowest-cost employee-only coverage offered)
>> Review sample drafts of Forms 1094-C and 1095-C for Section 6056 reporting.