Employers Should Plan for ACA Reporting for 2015 and 2014

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Employers Should Plan for ACA Reporting for 2015 and 2014
Calendar08 October 2014

Administrative burden tops list of employers concerns

For the first time since the law was passed, the administrative burden of ACA compliance surpassed the excise tax as the top concern for employers in Mercer’s seventh health care reform survey, conducted in January of this year. Since then, the government has issued the final regulations, draft forms, and instructions to comply with the 6055/6056 reporting requirements. We polled US employers about the requirements during a Mercer Select web briefing this week. More than half of them said they don’t yet know how they will comply; a third plan to complete the reporting in-house (at least for now), and the rest will rely on their benefits administration vendor, payroll vendor, or other third party. The biggest employer concerns about the reporting requirements were getting a system in place for 2015 and obtaining the required data from various sources. The focus of the web briefing was on reporting in 2016 for 2015.

But wait…2014 may not be an EZ tax season

 

H&R Block is busy training tax preparers for the new complexities of filing for 2014. The upcoming tax season could be hectic for employers, too. All American income tax filers will be required to check a box on their 1040 indicating whether they had minimum essential coverage (MEC) in 2014 to show they complied with the ACA individual mandate. Instructions for what to do if you are not able to check the box have not yet been released.

 

  • Those that received an advanced premium tax credit from a public exchange or want to claim the credit with their filing will have to ditch the Form 1040-EZ for the longer 1040 or 1040A and attach Form 8962 to verify their eligibility for the credit.
  • Those who didn’t have MEC and believe they are exempt from the individual mandate will have to attach Form 8965 to claim the exemption. A potential reason for exemption is that affordable coverage wasn’t available to them. There have been several news stories recently that detail the complexities of filing for an exemption with the IRS or through healthcare.gov.

 

Those filing either form who were eligible for employer-sponsored coverage will need to know whether their employer coverage was affordable and provided minimum value.

 

Let’s be honest, most of your employees aren’t going to remember that you gave them information about MEC and minimum value on page 4 of their Summary of Benefits and Coverage (SBC). And, they aren’t going to remember the 2014 monthly premium for their lowest-cost health insurance option for purposes of the affordability calculation. The vast majority of your employees are not even going to know they need this information until they begin to file their taxes.

 

Can you hear the phone ringing?

 

I recommend that you include a reminder in your employee W-2 communication that advises employees that they will have to provide information on their health coverage in 2014 when they file their taxes. You should remind them that if they were eligible for benefits, they were offered coverage that met the MEC requirements and provide the monthly amount of the lowest-cost premium for employee-only coverage — and/or direct them to where they can find the SBC and 2014 premium rates. Having this information, along with eligibility definitions, posted somewhere that is easily accessible by employees during the upcoming tax season, could save you a lot of phone calls.

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