ACA compliance: Part II

The first half of this two-part column covered one of the major changes to the Affordable Care Act for 2015, the employer shared-responsibility mandate. Following are several other important changes that companies need to know about.

Reporting requirements

All large employers that are subject to the play or pay requirement must now report to the IRS each year on anyone who was an FTE for at least one month, providing information such as whether that person was offered health coverage and the lowest employee cost of coverage that meets minimum value requirements. The IRS mandates that employers collect data in 2015 and submit the first round of information reports in 2016.

If an employer offers a fully insured plan, the health insurance carrier is required to submit the return on behalf of the employer. Employers that offer self-insured health plans must report on all employees and dependents covered under the plan.

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The IRS’ final regulations offer three reporting methods:

• Under the general method, an employer files a return for each individual who is an FTE for one month or more during the calendar year using Form 1095-C.

• The first alternative reporting method removes the requirement that the employer report month-by-month information for employees who received a “qualifying offer” for all 12 months of the year. A qualifying offer is “an offer to an employee and his or her spouse and children of coverage that provides minimum value and for which the employee’s share of the self-only premium does not exceed 9.5 percent of the single federal poverty level, for an individual in the lower 48 states,” according to the IRS.

• The second alternative method eliminates the need for the employer to identify which employees are full time. An employer may use this method if it “provides qualifying offers of minimum essential coverage that provides minimum value and is affordable to at least 98 percent of its employees and their children.”

Safe harbor

To cope with escalating health care plan-related expenses, many employers are exploring options to avoid or minimize penalties, as well as contain health coverage costs. In 2015 the IRS permits employers to take advantage of one of three safe harbors to determine whether the health plan they offer is affordable. As mentioned previously, health coverage is deemed affordable “if that employee’s required contribution for the calendar year for the employer’s lowest cost self-only coverage that provides minimum value during the year does not exceed 9.5 percent of:

• That employee’s Form W-2 wages from the employer for the calendar year.

• An amount equal to 130 multiplied by the employee’s hourly rate of pay as of the first day of the coverage period or the lowest hourly rate during the calendar month, or 9.5 percent of the employee’s monthly salary for salaried employees.

• The federal poverty level for a single individual. Because a plan’s affordability is based on self-only coverage, some employers may have shifted costs to family coverage, while keeping employee-only coverage affordable.” •

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