The ACA is complicated enough. Don't add unnecessary penalties.
Confused about the Affordable Care Act and whether or not your business is subject to "pay or play" penalties? You're not alone. The ACA has been a work in progress since its inception and had many rule changes and modified deadline announcements. Keeping the rules straight and complying with the ACA without adequate staffing can leave you overwhelmed when trying to remember which forms to file and when. These forms are what the IRS uses to determine if your business is subject to the "pay or play" penalties for not offering adequate health coverage, so filing correctly can save you time and money.
Eide Bailly has taken a lead role in working with employers on ACA compliance. Our team has the experience and knowledge to help you every step of the way. Our health care reform specialists can give you a better understanding of the requirements and can assist you in filing—whether you're an applicable large employer or a small business with a self-funded insurance plan.
Specifically, we help clients:
The IRS has started sending out Letter 5699s over the last year asking some employers where their ACA forms are. It’s better to file late forms as soon as possible to try to ward off these notices. We often see clients miscalculate the FTEE (full-time equivalent employee) number because the hours threshold is different than what the rest of the regulations state for a FT (full-time) employee. If the calculation is done incorrectly, it could tell the employer that they are a small employer, i.e. 49.99 FTEEs, and therefore not an ALE that has a filing requirement. If forms are not filed when they should have been, the penalties are severe, increasing to $270 per form in 2019. The IRS can double this penalty if there is intentional disregard for the rules.
All employers, regardless of size, have a filing requirement if they have a self-funded plan. In addition, employers who are applicable large employers (ALEs), have a filing requirement regardless if they offer insurance or do not offer insurance. Small employers with self-funded plans file forms 1094-B and 1095-B, whereas large employers file forms 1094-C and 1095-C. Large employers that have self-funded plans put additional information on form 1095-C to report the months of coverage. There is a huge misconception that these forms are not required after 2018. While the individual mandate is gone, the employer mandate is still very much alive.
The non-filing penalties are listed above. The employer mandate penalties have increased to $2,500 and $3,750. If an ALE doesn’t offer affordable and adequate insurance to 95% of their FT employees and a FT employee gets a premium tax credit, the company will pay a penalty of $2,500 on every FT employee, less the first 30 FT employees. If the employer offers insurance but it’s unaffordable to an employee who goes to the Exchange and receives a premium tax credit, the employer will pay $3,750, but only on that one employee, not the entire FT workforce.
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Get Your ACA compliance questions answered during our NEW ACA roundtables.
Complying with the Affordable Care Act continues to be a challenge for many businesses. Whether it’s being unaware of filing obligations, new and changing regulations, or untimely or incorrect completion of forms, there are many ways companies can leave themselves at risk for large penalties.
Our NEW pilot roundtables will provide you access to accurate and timely information and provide the opportunity to get your burning ACA compliance questions answered by one of the country’s leading ACA professionals.
Controlled Group Awareness Helps Clients Avoid Penalties
A group of related restaurants that each had less than 50 full-time employees but together had more than 50 became subject to the ACA compliance requirements due to controlled group rules. We helped the client see their compliance obligation and filed the 1095 forms for them, saving them costly penalties.
Understanding Measurement Periods Leads to Saved Money
We recently assisted a lawn care and snow plowing company with determining which of their employees are considered full-time, part-time or seasonal under ACA rules. This enabled the business to accurately ensure they were not subject to penalties that could have exceeded $2,000 per employee.
Employee Status Analysis Brings Positive Results
We recently helped a hotel that operates a ski hill determine whether or not they qualified as an applicable large employer. Due to the seasonality of the snow ski industry, the business had a large number of seasonal employees from November to May each year but had only about 10 year-round full-time employees. Through comprehensive analyses, we determined that the client only had about 40 full-time equivalent employees, and so the employer was not subject to the filing requirement, nor were they required to offer insurance to these employees.
Quick Thinking Helps Client Meet Compliance Deadlines
A financial institution had recently gone through a merger and lost their ACA compliance person in the process. With the filing deadline fast approaching, the client had purchased software prior to the merger but found out that what they paid for didn’t allow e-filing of the required ACA forms. Our team provided the employer with a template that made it easy to download their data and send it back for us to upload and e-file with the IRS before the deadline.
Revaluating Compliance Obligations Reduces Penalties
A client that we had provided ACA consulting to in 2013 requested our assistance with their 2015 ACA forms at the last minute. In 2013, the client was a mid-sized employer with almost 80 full-time employees. However, between 2013 and 2015, the client had lost their mid-size employer transition relief due to dropping their health insurance coverage after the final pay-or-play rules were issued. This caused a couple of their employees to receive subsidies from the exchange, which resulted in the client facing a slew of penalties totaling almost $100,000. Our ACA team was able to look at employee hours for the current previous calendar year and determine that the client had just over 100 qualifying full-time employees, which granted them additional transition relief and reduced their penalties to zero.
Filing Requirement Knowledge Saves Client Resources
A large trust providing insurance to various employers asked us to help determine if they had an ACA filing requirement. After a conversation with the client and their attorney, it was determined the organization had 70 full-time employees and needed to complete than many 1095-C Forms for their employees, in addition to the 19,000 1095-B forms for the other employees that were provided insurance through the trust. The insurance trust did not realize their filing requirement, and fulfilling that requirement saved the client $250 per form.