If you have more than 50 full-time employees, you are probably aware of the Affordable Care Act’s Jan. 1, 2016 deadline to provide insurance or a monthly employer stipend and report it to the Internal Revenue Service. Here are some things to consider as we near that deadline.
ACA Compliant Health Insurance Plans
There are three types of health care plans that employers may choose to meet ACA compliance: Minimum Essential Coverage (MEC), Minimum Value Plan or Affordable Coverage.
- MEC – Meets ACA mandates, covers dependents and provides no-cost preventative care.
- Minimum Value Plan – Must cover at least 60% of total allowed costs of certain categories of health care. This is determined by the U.S. Department of Health and Human Services calculations or actuarial certification.
- Affordable Coverage – Employee’s share of the lowest-cost self-only coverage is no more than 9.5% of their annual household income. To help determine this affordability threshold, employers have access to three IRS safe harbors.
What Qualifies As Full-Time Employment?
A full time employee works at least 30 hours a week and is still entitled to coverage if they take unpaid leave for FMLA, USERRA, summer teacher breaks, and jury duty. The FTE status is not based solely on whether they are hourly or salary; ongoing, new, variable hour, part-time and seasonal employees all must be taken into consideration.
ACA Reporting Requirements
All employers of at least 50 FTEs must file documents annually with the IRS to confirm that they are ACA compliant. This includes filing the Form 1094-C, which reports to the IRS, and the Form 1095-C, which reports to employees.
- The 1094-C details how many FTEs you have, information about your coverage, a monthly breakdown of what your coverage offers, and indicates the lowest employee cost of self-only coverage.
- The Form 1095-C includes the employer and employee information, dependent information and a monthly breakdown of eligibility, coverage and lowest employee cost of self-only coverage.
ACA Penalties for Small Employers
If you are ACA non-compliant, you are required to make an Employer Shared Responsibility payments as follows:
- If you do not offer coverage, you owe $2,000 X the number of employees (minus up to 30).
- If you do offer coverage, but it is inadequate, you owe the lesser of $3,000 per full time employee receiving a subsidy OR $2,000 X number of employees (minus up to 30).
While this can all seem overwhelming, there are electronic solutions out there that simplify the process. Unsure whether you are ACA compliant?
Contact our knowledgeable staff today for assistance on meeting this crucial requirement.