No matter what you call it (the Affordable Care Act, ACA or “Obamacare”), the passage of the Patient Protection and Affordable Care Act brought big changes to the healthcare landscape, especially for employers. While it was signed into law in 2010, it took five years to phase in all of the changes so we don’t blame you if you’re still trying to figure it all out.
Maybe you fit into one of these categories:
- New to managing HR
- Just started your business
- A seasoned HR director struggling to keep track of deadlines and regulations with all of your other responsibilities
- You’ve finally hit 50 full-time equivalent employees–congrats! This means as an ALE (Applicable Large Employer) you need to pay a lot more attention to healthcare laws and filing deadlines
We’ll hit the highlights and point you to some resources so you can dig into the details.
Employee Shared Responsibility Mandate
The bottom line: Businesses with 50 or more full-time equivalent employees must provide employees with coverage or face penalties.
What you need to know:
- The health insurance plan you offer must meet essential coverage and affordability requirements, meaning the employee’s contribution does not exceed 9.56% of their annual household income. Some of the coverage requirements include benefits such as hospitalization, maternity and newborn care, prescription drug coverage, and mental health services.
- Everyone (read “your employees”) must enroll in health insurance by January 31, 2019 or face a 2.5-percent tax on their annual adjusted gross income. This is why it’s critical for you to communicate about open enrollment to any employees who may not be covered. (Check out our blog on “Taking the Stress Out of Open Enrollment” for creative ways to engage your employees.)
- Form 1095-C Deadlines: Employers are required to submit reports to the IRS on the healthcare coverage they offered to employees. Here are deadlines you should make note of:
- January 31, 2019 1095-C forms stating their healthcare options must be delivered to employees on paper or by hand, unless they’ve consented to electronic delivery.
- February 28, 2019 Paper filing deadline for 1095-C (option for those with less than 250 information returns).
- April 1, 2019 Electronic filing for 1095-C forms to the IRS (Electronic filing is required for businesses with 250 or more information returns).
Don’t forget form 1094-C which serves as a cover page, if you will, for 1095-C.
- Don’t be tempted to try to avoid penalties by reducing hours thereby falling under the threshold of 50 full-time employees. If you reduce staff hours for any other reason than a legitimate one, you may be denied tax benefits and be subject to a 40% penalty for violations! (If you plan to reduce staff hours for justifiable, business reasons, like an economic downturn, it may worth seeking professional guidance to make sure you’re compliant.)
- The IRS provides legal guidances and other resources including brochures, videos and podcasts and legal information for Applicable Large Employers. Click here for details.
What about small business (under 50 FTEs) that want to provide healthcare?
According to a survey by Glassdoor, health insurance is the benefit that most significantly impacts employee satisfaction. If this is something you can offer, it’s certainly a crowd pleaser and you may also reap a tax credit.
ACA established the Small Business Health Options Program (SHOP) for small employers with 1-50 full-time equivalent employees who want to provide health and dental coverage. You have the option to enroll in SHOP through private insurers or with the help of a SHOP-registered broker.
Regardless of whether you offer health insurance or not, employers are required to provide certain information about the health insurance marketplace to their employees.
How to Reduce ACA Headaches
A payroll and HCM partner can alleviate the stress and confusion associated with ACA compliance through data management and customized reporting.
If filling out dozens (or hundreds!) of forms isn’t your idea of a great time, consider what an HCM platform can do to save you time and reduce errors:
- Track your employee hours according to your specified measurement period and notify you when employees become eligible or ineligible for healthcare coverage at every payroll period.
- Automate the process for your 1095 forms and autopopulate the appropriate IRS-specified code for each employee saving you hours in data entry. When the filing deadline comes, you’re ready to go!
Pretty simple, isn’t it?
We’d love to chat about how we can help take the pain out of tax-time and compliance, reducing your stress and increasing your time.