If you’re an applicable large employer (ALE) that is already offering a health care plan to employees that complies with the minimum essential coverage requirements of the Affordable Care Act, the good news is that you’ve taken the first major step in avoiding the most punitive penalties under the law. However, this doesn’t mean your ACA compliance work is done. There are a number of other ongoing and annual requirements that employers must be aware of and comply with.
Summary of Benefits and Coverage (SBC) Disclosure
All employers who sponsor health care plans are required to distribute a standard Summary of Benefits and Coverage to each covered employee. The purpose of the SBC is to explain to employees what the company’s plan covers and what it costs, thus providing employees a better understanding of their options for buying health coverage. The U.S. Department of Labor has posted a complete FAQ on SBC disclosure.
Reporting Cost of Coverage on Form W-2
All employers who offer applicable employer-sponsored coverage must report the cost of that coverage in Box 12 of each employee’s Form W-2. The primary purpose is to inform the employee of the total cost of health care, including the company contribution and employee payroll deductions.
IRS Forms 1094-C and 1095-C
Internal Revenue Code Section 6056 requires ALEs to furnish statements to each individual who was a full-time employee for at least one month, to disclose whether each of these full-time employees and their spouses and/or dependents were offered health coverage and, if so, to report the lowest cost of individual coverage available to the employee. In addition, the employer must report similar information with respect to part-time employees who are both offered and accept coverage. Copies of these statements must also be transmitted to the IRS, along with certain transmittal information.
The information that needs to be provided to covered individuals is generally included on the new IRS Form 1095-C, and the transmittal information to the IRS is on Form 1094-C. It should be noted that the IRS has announced it will not impose any penalties on ALEs that can show that “they have made good faith efforts to comply with the reporting requirements.” The relief is available, however, only in cases when compliance is timely.
Maximum Waiting Periods for New Employees
A new employee who has met the plan’s substantive eligibility conditions (such as, for example, being in an eligible job classification, achieving job-related requirements specified in the plan’s terms or satisfying a reasonable employment-based orientation period) must be offered coverage that becomes effective within 90 days of the satisfaction of such eligibility requirements.
Finally, while not a requirement per se, it is vital for companies to pay careful attention to the news surrounding the ACA. The ACA is still, to some extent, a work in progress. Especially with a presidential election on the horizon, the law remains subject to both minor adjustments and drastic changes (for example, states will be able to permit ALEs to purchase coverage through the health insurance exchanges beginning in 2017). By staying ahead of the curve on ACA-related news and changes, you’ll ensure that ACA compliance can be safely checked off your lengthy to-do list.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.
Avi Sinensky is an attorney at Meltzer, Lippe, Goldstein & Breitstone LLP in New York, where his practice focuses on corporate and employee benefits law. He advises clients on strategies to overcome Affordable Care Act challenges and to capitalize on related opportunities.