Preparing for the ACA: Are You Ready?
The ongoing implementation of the Affordable Care Act (ACA) has put many organizations in frenzy mode as they strive to meet the new regulations introduced by the law. And while the ACA will impact certain organizations differently, they all have at least one thing in common: their reporting obligations to the IRS will increase tremendously. With new requirements going into effect for the 2015 calendar year, now’s the time for companies to look at their current ACA strategy and adjust their approach accordingly.
While large employers – those with 100 or more full-time employees – were required to provide their full-time employees with affordable health coverage as of January 1, 2015, this requirement will go into effect on January 1, 2016 for those with between 50 and 99 full-time equivalent employees. However, these companies must still comply with the same reporting requirements as large employers for 2015. As the deadline for reporting those numbers to the IRS will be here before we know it, it is crucial that companies understand what they can do to fully prepare for these deadlines.
So, what are the main things employers should do to ensure they’re ready for the ACA? Consider the following five points:
1. Lowered threshold for full-time employees:
Traditionally, those working 40 hours were considered full time; however, under the ACA, any employee working at least 30 hours per week or 130 hours per month is considered full time. This is an important distinction, as it requires a new way of classifying employees.
2. Difference between full-time and full-time equivalent:
A full-time equivalent employee is a combination of the hours of your part-time employees. This is particularly important for companies with less than 50 full-time employees that rely on part-time workers. As such, the number of full-time equivalent employees (based on the number of hours per month worked by part-timers divided by 120) may put them over the 50 employee threshold.
3. Changing status year to year:
As the number of employees a company has can fluctuate and impact their status as an Applicable Large Employer (ALE) and their healthcare obligations, employers can review their status each year. This further drives the need for companies to track all employer hours and report them accordingly.
4. Ensuring form completion:
Employers with 50 or more full-time equivalent employees are required to provide their full-time employees with 1095-C forms, which explain what healthcare coverage was made available to the employees.
5. Companies with fewer than 50 full-time equivalents:
Those smaller companies that only offer fully insured health coverage (or do not offer health coverage) will not have to provide 1095-C forms. If a small company offers insured health coverage, the insurance carrier will send Form 1095-Bs directly to those employees who enrolled in coverage. (In the unlikely event that small company offers self-insured health coverage, it will have some of the same reporting responsibilities as larger employer.) Regardless, small companies should still track all employee hours if their full-time equivalent count could go above 50.
As the landscape surrounding the ACA continues to introduce new challenges – and with the reporting deadline just around the corner – employers of all sizes need to know where they stand in the eyes of the law. Recognizing what your requirements are, and having the right plan and technology in place to see it through, is essential to a successful strategy. So, if you aren’t ready just yet, now’s the time – and Paycor is here to guide you with ACA compliance solutions and our ACA reporting software.
Check out this 2-page case study to learn how Paycor is helping Jungle Jim's prepare for and stay in compliance with the Affordable Care Act.