Maintaining ACA Compliance for Employers
Although the Affordable Care Act (ACA) was passed in 2010, the requirements continue to evolve from the original format. Several changes have been implemented since its enactment nearly 7 years ago. With 2016 behind us, one may think the growing pains associated with ACA compliance would be a thing of the past. However, 2016 was a significant year for the ACA, as it was the year in which the employer mandate was “fully implemented.” Despite the current uncertainty of the ACA's future, it is important for employers to plan to remain compliant in 2017 to avoid penalties.
Is your Organization Equipped to Comply?
The “full implementation” of the employer mandate made it a requirement for businesses with 50 or more full-time equivalent employees (FTE) to provide health insurance to at least 95% of their full-time employees and dependents up to age 26, or pay a fee.
For an organization to maintain ACA compliance, they must adhere to the following deadlines:
- Jan. 31, 2017: Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met).
- Feb. 28, 2017: Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper. *
- March 31, 2017: Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. *
The data required to file the forms mentioned above can be found in several different software systems that a company would use. Unfortunately, many organizations utilize HR systems that inconveniently piece together functions such as Payroll, Time & Attendance, Recruiting, Benefits, and more, which requires the compilation of required data from multiple sources. Using a unified system as a single source of truth for all reporting data will provide your organization with a simpler process for ACA compliance.
What Penalties are Applicable to Noncompliant Employers?
The penalties and fees can be costly for those that do not comply with the ACA. An organization can incur penalties for either not offering health insurance coverage that is affordable or not offering it at all. To help clarify these requirements, organizations can navigate through the Penalties for Employers Map created by The Henry J. Kaiser Family Foundation.
- The penalty for each month the employer fails to offer coverage is $2,260, divided by 12 times the number of full-time employees (minus up to 30).
- The penalty for each month is $3,390 divided by 12, for each full-time employee receiving a premium tax credit that month (up to a maximum of $2,260 divided by 12, times the number of full-time employees (minus up to 30)).
What are other Employers Concerned about?
The recent election definitely raises the concern of employers for the future of the Affordable Care Act. Will it be repealed? Will it be replaced? Or, will it be modified at all? Only time will tell, but it is important for employers to maintain ACA compliance in the meantime and stay informed if and when changes are made.
According to a survey of 800 employers conducted by brokerage solution provider Aon, 28% responded that the employer mandate is their biggest concern for the new administration. Getting up to speed on the frequent revisions to the Affordable Care Act is a priority for many business leaders. However, the complexity of the ACA may make it difficult for the new administration to appeal in the near future.
While there are many concerns in regards to the future of the ACA, this Act is still mandated for 2017. It is critical for employers to ensure that they are equipped to comply with all ACA deadlines, to understand the penalties of noncompliance, and to stay up to date with provisions. That way, organizations will be on the road to success for ACA Compliance.
This DATIS Blog was written by Stephanie Kaselis, DATIS, on January 26th, 2017 and may not be re-posted without permission.
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