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Affordable Care Act Update and Compliance Requirements

July 28, 2016

The Affordable Care Act has created complexity and an administrative burden for many businesses. Does your business have 50 or more full-time equivalent employees and/or do you offer a self-insured health plan? If so, did you meet the June 30, 2016, 1094 and 1095 e-filing deadline to avoid costly penalties?

Below is a quick update of new ACA information your business should be aware of: 

Critical ACA Compliance Test
The 95 percent rule under the ACA states that employers must offer coverage to at least 95 percent of their full-time employees and their dependents. Making an offer to less than 95 percent of these full-time employees will result in IRC §4980H(a) penalties, which is the penalty for having no insurance. Employers should be very aware of who their full-time employees are so that variable-hour employees meeting the full-time employee hours threshold are offered coverage.

Employment Status Change
An employee who changes from full time to part time within a stability period must be part time for three full months before they are considered part time under the ACA. These individuals must also have been offered coverage that met minimum value when they were initially hired.

Transitional Relief Gone
There is no longer any transitional relief for employers with 50-99 employees. All employers with 50 or more full-time equivalent employees need to be in compliance.

Form Information
Employers must provide affordable, minimum essential coverage or face penalties. The coverage must be considered affordable for the lowest cost self-only premium. Although coverage for dependents does not have an affordability requirement, it must be offered.

Full-Time or Part-Time Status
An employee who works 130 hours a month is considered full time. Employers who are using a 12-month lookback measurement method need to base their full-time employees on 1,560 or more hours.

Signed Waivers
It is important for employers to collect signed waivers from full-time employees that decline coverage so that if the Marketplace or the IRS have questions on an employee’s offer, there is a clear paper trail.

Advanced Premium Tax Credit (APTC) Notices Issued
Some state exchanges have started issuing notices for employees who were eligible for an APTC. Federal exchanges will start issuing these notices in June 2016. In July 2016, the IRS will start auditing 1094 and 1095 Forms.

2016 Filing Deadline
The deadline for completing and submitting the 1094 and 1095 Forms is January 31, 2017. As of now, there is no extension for the 2016 1094/1095 Forms.