Guest Blog by Shannon Breuer, Partner at Eide Bailly
In the midst of all the other things you have to worry about when you’re running a small business, you may not be thinking about health care. However, with the reporting requirements of the Affordable Care Act (ACA) and the coverage rules, you should be.
The ACA has created a great deal of complexity for businesses, especially if you have 50 or more full-time equivalent employees and/or offer a self-insured health plan. Remember, the determination of whether or not you are an Applicable Large Employer is based on a defined calculation and must include all members of your group…meaning all related companies may need to be included in the count.
Full-time employee: An employee who works 130 hours a month. If you use a 12-month lookback measurement, you need to base your fulltime employees on 1,560 hours (or more) per year.
The ACA calls for large employers to provide affordable, minimum essential coverage, and not complying could lead to penalties. The coverage must be considered affordable for the lowest cost self-only premium. Also, you must offer coverage for dependents, even though there is no affordability requirement. There are some good planning ideas that can come from evaluating your compliance with the ACA so we encourage you to consider doing so.
Even though your business may be small, the ACA is still important to be aware of, especially as you grow.
Here are a few updates you should be keeping in mind:
- Critical ACA Compliance Test
This rule states that large employers must offer coverage to at least 95 percent of their full-time employees and their dependents. Not doing so will result in penalties, specifically the IRC §4980H(a) penalty, which is the penalty for having no insurance.
Wondering what we mean by penalties? Well the Applicable Large Employer penalty for those who fail to offer group coverage is now up to $2,160 times the number of fulltime employees in excess of 30 employees. If you fail the affordability and/or minimum value test, the penalty increases to $3,240 per employee, but only for those for whom the tests were not met.
- Employment Status Change
If you have an employee who goes from full time to part time, you may need to continue their coverage following their date of change. Depending on which measurement period method you use, the employee may need to be part time for three full months before they are considered part time under the ACA. Also, these individuals have to have been offered coverage that met minimum value when they were initially hired.
Additionally, someone moving from part time status to full time status may or may not be required to be offered insurance depending on the measurement period selected and the nature of their job requirements.
- Transitional Relief Gone
The transitional relief for employers with 50-99 employees has expired and now all employers with 50 or more full-time equivalent employees have to be in compliance with the ACA.
- Signed Waivers
Just because you offer it, doesn’t mean your employees have to use it. However, it is still important employers collect signed waivers from full-time employees that declined coverage. It’s in your best interest to have documentation of signed offer letters for both accepted and declined coverage so there’s a clear paper trail.
So how do you track this?
On forms 1094 and 1095. The deadline for completing and submitting these forms to participants is January 31, 2017. The 1094 and 1095 Forms are due to the Internal Revenue Service by March 31, 2017 if electronically filed or if mailed, by February 28, 2017. If these deadlines are not met, businesses face penalties of at least $250 per employee.
And while it might seem easy, it’s really not. So if you need assistance, we can help.
A version of this post first appeared on EideBailly.com.