Even if you think you understand ACA requirements and are providing the necessary access to health care to avoid the $2,000 per-employee assessment, if your company can’t unequivocally sign off on its offer of coverage to “substantially all” full-time employees (relaxed to 70% for 2015, but climbing to 95% by 2016), and isn’t able to properly track and report detailed, employee-specific data about its offer, you — and many other employers — may have a great deal more to do than you realize.
Here are four areas where we see employers getting tripped up on the dizzying criteria and complex technical requirements that are part and parcel of compliance with the employer mandate.
Meeting the minimum
To avoid the employer mandate assessments, employers with 50 or more full-time equivalent employees (100 in 2015) — now defined as anyone who works 30 or more hours per week — must offer the opportunity to enroll in an employer-sponsored plan that provides “minimum essential coverage” and also satisfies the following two key criteria.
- Minimum plan value = A plan must pay at least 60% of the cost of covered services.
- Affordability = Employee contributions for employee-only coverage must not exceed 9.5% of an employer affordability safe harbor or the employee’s household income.
Accounting for controlled group rules
The IRS may subject smaller employers to the assessments based on their relationship to a controlled group (two or more entities connected through common ownership). Where the combined total of full-time employees in a controlled group is at least 50, each employer is subject to the employer mandate, regardless of the number in its individual employee population.
Determining whom you have to count and how to count them
The more liberal definition of full time has employers sorting through the nuanced implications for different types of employees and situations, and scratching their heads. How should employees with jury duty or disability leave be counted? What about an adjunct professor or per-diem nurse, who are variable-hour employees but for whom hours are not tracked? Calculations are far more complicated than merely counting the days someone works, and different methods can be applied. Avoiding assessments means investing the time to develop a clear understanding of these often-complex formulas.
Understanding the specifics of tracking and reporting
When it comes to reporting, there are two primary IRS requirements: 1) employers must report all full-time employees and data about health coverage offers made to those employees on a month-by-month basis; and 2) health plans, including employers sponsoring self-funded plans, must report who was covered, including dependents, again on a month-by-month basis. Employers and health plans must report this information on individual statements to employees and consolidated reports to the IRS.
Keep in mind that the government won’t try to impose employer mandate taxes until after the year has closed out. And while employers who offer coverage to 98% of employees will be eligible for reporting relief when reports are first due in 2016, this is tracking and reporting they must do for the 2015 calendar year. It would behoove employers to figure out right away if they have the information they need, given the long queues most face when requesting special programming for their HR information systems.
Delays and relaxation in some of the mandate’s requirements may be encouraging a bit of languor among employers. However, compliance depends on a high degree of organization — first to simply understand the many complex technicalities, and then to make sure all requirements are met. Employers would do well to get their ducks in a row now so they won’t have to scramble to avoid assessments later.