Key Details of The New Affordable Care Act Requirements for ALEs
An Important Law
The complexities of the Affordable Care Act (the “ACA”) concern many employers today. Learn more about the requirements of this important federal statute.
You’ll ensure that your business enterprise meets its obligations under the law. Just consider a few of these common questions and answers about basic ACA provisions, the employer mandate, reporting requirements and other issues.
I. Basic ACA Provisions
What does the Affordable Care Act involve?
Congress enacted the Affordable Care Act (“ACA”) in order to provide health care coverage for all citizens in the United States. This comprehensive federal legislation involves many complex requirements.
Does the ACA always remain the same?
No. The provisions of the ACA change from time to time as Congress enacts amendments to the law. Also, Congress decided to implement the Act in stages, so in 2015 some previously enacted provisions took effect for the first time.
Can you list some of the changes that took effect in 2015?
In 2015, a number of important provisions of the ACA took effect for the first time. An “employer mandate” occurred in 2015, for instance. Also, the federal government required employers to report some information relating to employee health care for the first time.
II. The Employer Mandate
What does the “employer mandate” require?
Any employer classified as an ALE must offer health care coverage to full time employees and certain of their dependents. Failing to comply with this provision could result in fines against the employer.
What does the term “ALE” signify?
The ACA uses the term “ALE” to signify an “applicable large employer” covered by the legislation. In most cases, employers who hire 50 or more full time employees fall within this category. The rules for calculating an ALE status remain rather complex.
What purpose does the employer mandate serve?
The employer mandate seeks to prevent large companies from requiring their full-time employees to receive health insurance premium assistance from the government. If this situation occurs, a company classified as an ALE faces potentially stiff penalties under some circumstances.
What complexities exist in terms of identifying an ALE status?
Hiring a certain number of part-time employees may impact a company’s ALE designation. Also, having full-time employees working for related business entities sometimes impacts this issue. These situations might result in an “aggregated” number of employees from these sources for some companies, so the firm would indeed become an ALE. In some cases, compensated student interns and temporary employees also qualify as full-time employees.
How can I determine if my company holds ALE status?
Consult with a qualified attorney about your firm’s status if you harbor any doubts about this issue. If the government does classify your company as an ALE, you will need to comply with the ACA, or face possible sanctions.
III. Reporting Requirements
What new reporting requirements went into effect in 2015?
In 2015, the Internal Revenue Code (“IRC”) Sections 6055 and 6056 imposed some new reporting requirements on employers. These rules will help the Treasury Department enforce employer mandates.
What does IRC Section 6055 require?
Employers must inform the IRS whether or not they offer the minimum required health insurance coverage to their employees. This provision applies to health plans that are self-insured and sponsored by an employer.
What reporting requirements arise under IRC Section 6056?
Any employer classified as an ALE must furnish a report about the health insurance coverage they offer to full time employees if employees use self-insured plans sponsored by the employer. The insurance company carries this responsibility when the company furnishes employees with fully insured plans.
Will this reporting requirement operate in a way similar to issuing a W-2 form?
What reporting forms should ALEs utilize?
ALE Employers sponsoring self-insured health plans for their employees can utilize two IRS forms: 1094-C to send information to the IRS, and 1095-C to summarize information for the IRS and employees.
Do non-ALEs use the same forms?
No. These employers may use 1094B and 1095B if they self-insure health plans. They basically utilize the same reporting forms as insurance companies.
IV. Other Issues
Can my company issue special tax-free payments to employees to cover their premiums in non-employer sponsored health plans?
Not in most cases after January 1. 2014. The Internal Revenue Service has cautioned employers this type of incentive to employees may violate the ACA’s requirements for no annual limit, and so an excise tax of up to $100 per day per violation may result.
What if ACA provisions confuse my staff?
Discuss any questions with a qualified attorney. The provisions impact many companies in the US.
Credit for this small business article goes to NECHES FCU, Port Neches, TX.
Neches FCU is a leading Texas credit union and has an awesome team of professionals ready to service all members.
When the doors open at any of the 9 service outlets, the mission of “Ultimate Member Satisfaction” becomes the driving force for every employee.
They are known for a personal, dynamic and fast-paced work atmosphere, delivering a memorable service experience, and where all members are known by their name.