How important is it for your health plans to meet the requirements of the Affordable Care Act (ACA) before January 1, 2016? The Department of the Treasury has released its final rules regarding the Employer Shared Responsibility mandate. As of 2015, large companies of 50 or more employees have to offer minimum value, affordable health coverage to their full-time employees or face a penalty. Some mid-sized businesses with 50-100 employees may have been able to delay this until 2016 if they met certain conditions. But by January 1, 2016, all employers with 50–100 full-time employees must comply with this mandate. Also, as of 2016 employers with 50 or more employees must offer minimum value, affordable health coverage to 95% of their full-time employees.
What are some of the steps that you can and should take today to ensure that your health plans are in place and meet the requirements of the ACA? There are penalties that you will face if you fail to properly prepare to meet the ACA requirement on or before the January 2016 deadline. Taking a proactive stance today will help you avoid these penalties and allow you to meet your obligation to provide your employees with their important health insurance benefits.
Action Steps to Take to Meet Your 2016 Requirements
Meeting your requirements requires a plan of action. This plan should be drawn up as soon as possible, accounting for the time that it will take your business to effectively meet the deadline with realistic and attainable milestones. In your plan, you need to consider the following:
- It is important to determine how many FTEs that you had in 2014 and track how many that you have during 2015. This number will be used to determine your need to comply with the 2016 deadline. The U.S. Small Business Administration provides the following guidance to help you determine how many FTEs you have and whether your company qualifies for transition relief during 2015.
You need to take steps today to determine if your plan meets the qualification for minimum essential coverage, whether the correct percentage of your employees will be covered by your health plans, and what additional steps need to be taken for your coverage to be in line with what is required under the ACA.
Employer Mandate Reporting
To check if employers are offering minimum value, affordable coverage to their full-time workers, the Internal Revenue Service (IRS) needs reports to be sent by applicable large employers, companies with 50 or more full-time employees. This is called Employer Mandate Reporting, or IRS Code Section 6056 Reporting. Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” must be filed by employers along with form 1095-C (one for each employee), entitled “Employer-Provided Health Insurance Offer and Coverage.” The forms are designed to determine whether employers owe a penalty under the Employer Shared Responsibility mandate. According to the Society for Human Resource Management, the forms will capture information about the health plan offer made as well as whether the offer is affordable and meets minimum value. Form 1095-C is also used in determining the eligibility of employees for the premium tax credit. Here are the instructions, although reporting is not required until 2016 for the 2015 coverage year.
Don’t wait until the last minute to begin the process of providing your employees with a health plan option. Check out this interactive timeline to see where you are with respect to important dates coming up so you can stay a step ahead and avoid any adverse consequences. And don’t forget to work with your broker or benefits consultant and have them guide you through the ins and out of the ACA. They can be a powerful resource and advocate.
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.
Donald Parker has more than 20 years of experience in the insurance and financial services industry with several Fortune 500 companies. He holds a life, accident and health insurance license in Virginia. He has been FINRA Series 7, 24, 63 and 65 registered and specializes in the areas of long-term care, senior needs, retirement and employee benefit planning.