The Affordable Care Act (ACA) established ongoing employer requirements with varying compliance deadlines. These responsibilities differ based on details including your business’ size and funding type. The main question we are currently facing with regards to the ACA is what is the impact of the president’s first executive order on employers.
In an article posted this January, Society for Human Resource Management (SHRM), a highly respected national organization of certified HR professionals, details how employer health plans may be affected noting that federal agencies might ease some reporting and coverage requirements. The article by Stephen Miller explains that “While the executive order has been seen as a strike against the statute’s individual mandate, which requires Americans to obtain coverage that meets ACA specifications, less attention has been paid to how the order and resulting agency actions might affect the employer mandate that requires organizations with 50 or more full-time employees (or equivalent part-timers) to provide ACA-compliant coverage to their full-time workers and to meet annual reporting and notification obligations.”
In the SHRM article, Scott Behrens, a benefits compliance attorney at Lockton is quoted as saying “the ACA is still the law of the land. Prudent employers will want to continue to comply with the ACA, including the play-or-pay mandate and reporting requirements”—including furnishing Forms 1095-C to employees and making all required filings with the IRS—”until formal guidance relieves them of those compliance obligations.”
The Jan. 20 executive order may affect employer plans’ coverage mandates and fees, but as of this point not much has changed and employers are instructed to continue their current practices. In regards to ACA Executive Order and Current Tax Filing Season the IRS posted “The IRS is currently reviewing the Jan. 20, 2017, executive order to determine the implications. Taxpayers should continue to file their tax returns as they normally would.”
The Affordable Care Act Tax Provisions for Employers page has more detailed information about determining the size of your workforce, why the size of an employer’s workforce matters, and other FAQs.
As a supplement to the IRS resource it may be beneficial to read Cigna’s piece on health care reform. Cigna, a nationally recognized health provider, offers an easy to follow one-pager with a flow chart to help employers better understand their responsibilities and potential penalties for not complying with ACA.
“Employers with 50+ full-time employees and/or full-time equivalents must offer medical coverage that is “affordable” and provides minimum value to at least 95% of their full-time employees and their children up to age 26 or face penalties.”
We have also developed a Q & A section based on suggestions from professional business associations nationwide:
Q: Does the Affordable Care Act (ACA) require all employers to offer health care coverage to their employees?
A: The ACA does not require employers to offer health care to their employees, but depending on the size of the group and if a full-time employee obtains a subsidy through the state health exchange, an employer may incur a financial penalty. Read more on the employer shared responsibility requirement.
Q: How will an employer know an employee’s household income for the purpose of estimating whether the coverage the employer offers the employee is ” affordable”?
A: The proposed regulation on Shared Responsibility for Employers Regarding Health Coverage offers three affordability safe harbors: one based on the wages reported in Box 1 of the employee’s W-2 form, one based on the employee’s hourly rate of pay, and one based on the federal poverty level for a single individual.
Q:When does the ACA’s requirement that employers with more than 200 employees must auto-enroll their employees into any coverage the employer offers with the right to choose to opt-out, take effect?
A:The ACA did not specify a firm date for the implementation of this provision and the federal agencies that are implementing the ACA are delaying the implementation of this provision for the immediate future.
Q: How do you determine if a plan is minimum value?
A: A plan must pay 60% of the cost of covered health services to provide “minimum value.”
Q:What type of coverage satisfies the requirement to have health insurance under the ACA and avoid the penalty?
A:The ACA recognizes the following types of coverage as satisfying the requirements for coverage of an individual:
- Medicare ( including Medicare Advantage plans)
- Medicaid or CHIP (Children’s Health Insurance Plan)
- TRICARE ( for military retirees and their families)
- Veteran’s Health Service
- Employer coverage that meets the minimum value (60% of the cost of benefits)
- Individual insurance that meets 60%actuarial value, i.e. the plan provides the 10 categories of essential health benefits and covers 60% of the cost of benefits)
- The plan was in existence prior to March 23, 2010, the date the ACA was enacted, and is a grandfathered plan.
You can find more Q & A and examples of employer penalties on the Cigna Employer Mandate Fact Sheet.
For more on tax impacts and regulations visit the IRS ACA page.