The ACA in 2016 and the Changing Benefit Landscape
The ACA in 2016 and the Changing Benefit Landscape

The ACA in 2016 and the Changing Benefit Landscape

One of the areas of chief concern for the year ahead in HR compliance is adhering to the various requirements and regulations put into place by the Affordable Care Act (ACA). That’s largely because the intricacies of ACA taxation are still being altered and some are still yet to be implemented, with the most recent change coming in the form of the Protecting Americans from Tax Hikes (PATH) Act, which came into effect in the middle of December 2015.

Anne Marie Singleton and Beth Bailey of McGohan Brabender gave us a wealth of insight into the recent and forthcoming changes to ACA benefits in our first session of the 2016 Paycor HR and Compliance Web Summit.

PATH and the “Cadillac Tax”

PATH—the Protection Americans from Tax Hikes Act—made three big changes to specific ACA-based taxes. These adjustments are in reaction to the fact that the ACA was meant to be a revenue generator, but it presumably hasn’t lived up to the promise. Now actions are being taking to make it at least “revenue neutral.”

  1. The medical device tax, which initially applied a 2.3% tax to devices sold after the end of 2012, is now under a two-year moratorium. The tax is now slated to take effect on devices sold on or after January 1, 2018, but will be under further analysis and review during this suspension period.
  2. The Health Insurance Industry Tax is also under such scrutiny. This permanent, annual fee on insurers has frequently been passed along to employers since 2014 by way of incremental increases in plan cost. A one-year moratorium has been put in place, in attempt to slow rising plan costs.
  3. The Cadillac Tax has been controversial since it was announced. PATH has tried to lessen the burden of the tax, originally not set to go into effect until 2018, by making the tax deductible as a business expense and delaying implementation until 2020. The penalties on the tax are still stiff, to the tune of 40% on high-cost coverage with no exceptions for grandfathered plans.

This tax is calculated on a monthly and per-person basis, where any plan above $850 per month for single coverage and $2,292 per month for family coverage is subject to it. At this rate, we’re looking at the possibility of three-quarters of employee health plans being subject to the tax by 2029.

ACA Reporting and Coverage

Fortunately, the government has extended ACA reporting deadlines this year.

  • Employers had until March 31 to provide 1095-B and 1095-C forms to their employees
  • Employers filing on paper with fewer than 250 employees have until May 31 to provide 1095-B and 1095-C forms and 1094 forms to the IRS
  • Employers filing electronically have until June 30 to provide 1095-B and 1095-C forms and 1094 forms to the IRS

In this first year only, the IRS will waive penalties for smaller employers that make a good faith effort to file on time, but that’s not to say those that miss the filing deadline all together will be offered this lenience. Penalties get heftier the larger a company is, maxing out at $250 per employee and $3 million total for a year.
On a more pleasant note, the auto-enrollment provision of the ACA—wherein companies with over 200 full-time workers would have to automatically enroll them in one of the employer’s plans—has been permanently repealed.

Trends

To combat some of the ACA employer mandates for small, fully funded employers, those employers are trying to become self-funded. Carriers are reacting with level-funded products (funded in nature, but also taking some of the risk out of the process). We’re seeing new movements in companies or trades coming together to be compliant and become self-funded. Healthcare captives are also growing in popularity.

Another big shift is that of employers’ focus moving to claims over administration costs. Per “healthcare dollar,” 87% of cost is now going towards covering claims. This, in turn, is requiring employers to mine big data so as to predict when claims may come based off of group employer wellness and trends.

As such, companies are giving even more attention to health and wellness programs so as to manage imminent claims and those farther down the road. Incentivizing good health practices is proving to be one of the best ACA cost-cutting measures.


This content came from a March 10 Paycor webinar. Missed Paycor’s Web Summit or want to hear this webinar as it happened live? Click over to our webinar recordings page. And, contact us if you're ready to make sure your company is covered for 2016 and beyond when it comes to the Affordable Care Act.


Subscribe to Our Resource Center Digest

Enter your email below to receive a weekly recap of the latest articles from Paycor's Resource Center.

Check your inbox for an email confirming your subscription. Enjoy!

More to Discover

DOL Final Overtime Rules: Quickstart Guide for Employers

DOL Final Overtime Rules: Quickstart Guide for Employers

On September 24, 2019, the Department of Labor issued its final overtime rule to increase the minimum salary threshold for executive, administrative and professional exemptions from $455 per week ($23,660 annually) to $684 per week ($35,568 annually). The new rule goes into effect January 1, 2020.As your organization considers how to prepare and comply, we’ve created this guide which outlines the new ruling, provides tips to manage impacted employees and offers a checklist of key details to follow to mitigate risk. Click below to instantly download the guide.

What are W-3 Forms? FAQs and Helpful Tips for 2020

What are W-3 Forms? FAQs and Helpful Tips for 2020

As a trusted HR & payroll provider, Paycor gets hundreds of questions about Form W-3 each year. To help HR professionals mitigate risk, our compliance experts answered the most frequently asked questions around Form W-3. What is a W-3 form? Technical answer: Form W-3 is used to total up all parts of Form W-2. Both forms are filed together and sent to Social Security Administration (SSA) every year. Form W-3 is also known as “Transmittal of Wage and Tax Statements.”What employers really need to know: As an employer your responsibility is to review all W-2s for your workforce, summarize employee wages and tax information and then combine that data into one W-3 form. What’s the difference between Form W-2 and Form W-3? The difference...

Employer Breastfeeding Laws by State

Employer Breastfeeding Laws by State

Breastfeeding, ACA and FLSA When President Obama made the Affordable Care Act (ACA) the law of the land in 2010, new amendments to the Fair Labor Standards Act (FLSA) addressing breastfeeding in the workplace went into effect. The new guidelines require all employers in every state to provide reasonable break time for an employee to express breast milk for their nursing child for one year after the child’s birth. States are Making Changes While the federal government laid the foundation, 32 states have built upon the basic law. Some states have clarified whether these breaks are paid or unpaid and some have extended how long breastfeeding mothers are protected by the law.Where does your state stand? Use the chart below to find out....

Case Study: Smuttynose Brewing Company

Case Study: Smuttynose Brewing Company

Compliance concerns and a desire to streamline their overall HR process led Smuttynose Brewing Company in Hampton, N.H., to find HR & payroll software that suited their needs. With employees scattered throughout the Northeast, Smuttynose needed an efficient way to collect hours worked and to ensure payroll tax compliance. “Paycor is a one stop shop with great customer service and that service does not stop after implementation. I consider Paycor to be a true partner. I am extremely satisfied that I made the switch to Paycor and believe that satisfaction will only grow stronger as our partnership has a chance to mature.” —Mia Jennings, Director of HR, Smuttynose Brewing Paycor’s HR, recruiting and onboarding solutions streamlined a...