This is the year that the rubber really hits the road for employers with 50 or more full-time workers.
The Affordable Care Act employer mandate for organizations with 50 to 99 employees takes effect this year, meaning that if you haven’t been offering your staff coverage before, you are now required to do so. There are also new reporting requirements for employers both in terms of submitting documents to the Internal Revenue Service as well as to your employees.
As the New Year gets underway, read this refresher so you don’t miss a beat and expose your business to penalties.
Check your grandfathered status
Review your plan’s grandfathered status:
- If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2016 plan year. Grandfathered plans are exempt from some of the ACA’s mandates. A grandfathered plan’s status will affect its compliance obligations from year to year.
- If your plan will lose its grandfathered status for 2016, confirm that it has all of the additional patient rights and benefits required by the ACA for non-grandfathered plans. This includes, for example, coverage of preventive care without cost-sharing requirements.
- If your plan will keep grandfathered status, continue to provide the Notice of Grandfathered Status in any plan materials provided to participants and beneficiaries that describe the benefits provided under the plan (such as the plan’s summary plan description and open enrollment materials).
Cost-sharing limits
The ACA’s overall out-of-pocket limit applies for all non-grandfathered group health plans, including self-insured health plans and insured plans.
Under the ACA, a health plan’s out-of-pocket maximum for essential health benefits may not exceed $6,850 for self-only coverage and $13,700 for family coverage, effective for plan years beginning on or after Jan. 1.
Employer mandate
Under the ACA’s employer mandate, organizations with between 50 and 99 full-time employees must start offering health coverage to eligible workers starting this year. Implementation for employers with 100 or more full-time workers took effect in 2015.
To determine if you are an ‘applicable large employer’ (ALE) under the ACA, you need to:
- Calculate the number of full-time employees for all 12 months of 2015. A full-time employee is one who works at least 30 hours a week.
- Calculate full-time equivalent employees (FTEs). Take the aggregate number of hours worked (but not more than 120 hours of service for any employee) for all employees who were not full time for that month, and divide the total hours of service by 120. This will give you the number of FTEs you have.
- Add the number of full-time employees and FTEs (including fractions) calculated above for all 12 months of 2015.
- Add up the monthly numbers from the preceding step and divide the sum by 12. Disregard fractions.
If your result is 50 or more, you are likely an ALE for 2016.
Reporting requirements
Starting in 2016, employers with 50 or more full-time or full-time equivalent employees are required to make additional filings with the IRS, as well as supply their staff with forms.
ALEs (with 50 or more full-time and full-time equivalent employees in the preceding calendar year) will use Form 1094-C and Form 1095-C to satisfy reporting requirements.
If filed on paper, these forms must be put in the mail no later than Feb. 28. If filing is done electronically, the due date is March 31.
You must also provide 1095-C to your employees before the end of January, along with their W-2 forms.