Despite ongoing attempts to challenge the Affordable Care Act (ACA), the U.S. Supreme Court again upheld the law, so the employer mandate still stands and requirements remain. And yet, more than 65 percent of our “Easy ACA for Employers” webinar attendees said they were not ready to file and furnish their 2015 ACA Forms, even though they are required by the federal law.
Silver lining for employers
On Dec. 28, 2015, the IRS announced an extension for the ACA reporting requirements for businesses. Notice 2016-4 extended the original due date for Forms 1095-B and -C from Feb. 1 to March 31, 2016, and Forms 1094-B and -C from Feb. 29 to May 31, 2016. While employers are given extra time to comply, the IRS is ready and willing to accept forms, and businesses are encouraged to file and furnish them as soon as possible, even if that is before the deadline.
Many organizations are still trying to get their reporting needs straightened out, but businesses also should be prepared for a number of significant changes that will occur this year. In addition to the extension, there are three main changes with which employers should be familiar.
- All Applicable Large Employers (ALEs), with 50-plus full-time or full-time equivalent employees, must now pay or play. Although these organizations were given transitional relief in 2015, they must follow guidelines in 2016. They still are required to file and furnish the Forms 1094/95 -B or -C.
- ALEs now must offer health care coverage to 95 percent of their full-time employees. This percentage went up from 70 percent in 2015.
- For 2016, employers facing fines for employees who qualify for subsidies through the exchange will be fined after their first 30 employees, not 80 as the law stated in 2015. Also in 2016, the annual penalties for failure to comly have been estimated by the IRS to be:
- $3,160 (assessed at a monthly rate of $270) per full-time employee who was offered inadequate or unaffordable health care coverage, but declined that coverage and instead received a premium tax credit or subsidy.
- $2,160 (assessed at a monthly rate of $180) multiplied by all full-time employees minus 30 (instead of the transition relief value of 80 in 2015) for employers who do not offer full-time employees and their dependents the opportunity to enroll in minimum essential health care coverage if at least one employee receives a premium tax credit or subsidy.
One thing that remains is that the employer mandate is here to stay. Because the ACA is constantly evolving, it is important employers choose an HR software provider that is privy to the latest changes and can handle all of the ACA’s complexities.