As applicable large employers (ALE) review their 2015 Affordable Care Act filings for reporting coverage data to the IRS in 2016, it is apparent that transition relief will relieve many businesses from hefty non-compliance penalties this year. Transition relief for 2015 health coverage allowed businesses more leniency under the Employer Shared Responsibility provisions and more time to furnish and file reports to the IRS in 2016.
As businesses finish filing ACA forms for 2015 coverage, what should they know to be prepared for 2017 reporting?
Here are 5 differences in compliance from 2015 coverage to 2016 coverage that ALE’s need to know:
1.ALE’s with more than 50 full-time or full time equivalent employees will now be assessed fines for non-compliance in the Employer Shared Responsibility provisions, section 4980h.
For 2015 coverage, only ALE’s with at least 100 Full-Time/ Full Time Equivalent Employees (FT/FTE) faced penalties under the Employer Shared Responsibility provisions in section 4980h of the Internal Revenue Code which included:
A $2000 fine for each FT/FTE employee (adjusted for inflation), after excluding the first 80 employees, if minimum essential coverage was not offered to at least 70% of an ALE’s FT/FTE employees and their dependents.
A $3000 fine for every FT/FTE employee who received the premium tax credit for purchasing coverage through the Health Insurance Marketplace because the employer coverage was not affordable or did not meet the ACA standard of minimum value.
2. ALE’s will now be penalized if they do not offer minimum essential coverage to at least 95% of their full-time or full time equivalent employees and their dependents.
Transition Relief from the IRS for 2015 coverage allowed ALE’s to only have to provide at least 70% of their Full-Time/ Full Time Equivalent Employees and their dependents affordable health coverage.
For 2016, ALE’s will have to provide minimum essential coverage 95% of Full-Time/ Full Time Equivalent Employees and their dependents affordable health coverage.
3. ALE’s that did not provide minimum essential coverage to their full-time/ full time equivalent employees and their dependents can now only exclude 30 employees from their fine calculation.
For 2015 coverage, if an ALE did not offer minimum essential coverage to at least 70% of its FT/FTE and their dependents were fined $2000 for each FT/FTE employee after excluding the first 80 employees
For 2016 coverage, if an ALE does not offer minimum essential coverage to at least 95% of its FT/FTE and their dependents they will be fined $2000 for each FT/FTE employee after excluding the first 30 employees
4. Good Faith Effort will not be considered when ALE’s report inaccurate or incomplete forms to the IRS in 2017.
For 2015 ACA filings, if an ALE made an effort to file forms, yet did so incorrectly or filed them late, they were not fined $250, as they demonstrated a ‘good faith effort.”
For 2016 ACA filings, filing incomplete or inaccurate information will result in a $250 fine per required return, with a maximum of $3 million a year.
5. Form Deadlines are subject to go back to their original dates.
On December 28, 2015 the IRS issued notice 2016-4, which extended the distribution and filing deadlines for the Affordable Care Act for 2015 information reporting requirements under sections 6055 and 6056 of the Internal Revenue Code. Notice 2016-4 provides applicable large employers more time to report to the IRS information about the health care coverage, if any, they offered to full-time employees and to furnish related statements to employees.
These deadlines will be moved back to their original dates when reporting for 2016 health coverage:
Deadline to Distribute Forms to Employees and Covered Individuals will be January 31, 2017
Deadline to File with the IRS will be Feb. 28, 2017 on paper or March 31, 2017 electronically.
In conclusion, fines from non-compliance will be steeper and more financially consequential for businesses as the IRS reduces transition relief for 2017 reporting.
So what is your strategy for ACA tracking and reporting for next year?
As a Workforce Management Solutions company, our ACA module allows your business to simplify the processes around ACA compliance to help avoid these steep penalties. By combining your payroll, benefit management, and employee hours tracked into one solution, you can have access to the following features:
Access to both real-time and historical data on ACA measurements
Compliance alerts to notify managers or HR staff when an employee’s status changes from full-time to part-time, when an employee is approaching eligibility, and when an employee has scheduled hours to put them over the eligibility limit
Alerts can also be sent to employees to notify them when they are eligible for benefits, and allow them to automate enrollment through self-service
Management dashboards provide consolidated views of regular and variable-hour labor pools
For more information on how APS can help you manage your ACA strategy, while reducing your administrative costs, call 844-299-2358 or visit us at www.apsanswers.com.