Everything a Not-For-Profit Needs to Know About Affordable Care Act Reporting

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Time is running out for not-for-profits to determine how they will report information for the Affordable Care Act (ACA). Many not-for-profits are at a higher risk for ACA penalties because they employ many part-time, seasonal or low-wage workers. Any organization that has 50 or more full-time equivalent employees must report to the IRS or face penalties of up to $500 per missing form.

An employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week. 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week. There are two measurement methods for determining whether an employee is full-time which the IRS has posted here. There is also an online calculator available from healthcare.gov.

Tracking the information that needs to be reported to the IRS shouldn’t be taken lightly. Penalties can stack up into the thousands of dollars if forms are missing or incorrect. The best way to avoid these penalties is to use fail-safe software that will auto-calculate each employee’s hours of service and the affordability of your health care offerings. From that information, the software will generate the correct 1095-C form for you to file.

Another benefit to implementing specific ACA software is the guarantee that you will always have the most updated 1095-C form. The government and IRS have released drafts of the form and with ACA software, you don’t have to worry if you have the most recent version or not.

The 1095-C form is required for each individual employee.

Tax Credits

Not-for-profits with fewer than 25 employees also need to pay attention to the ACA if they provide health insurance. Those organizations may be eligible for the small business health care tax credit to help pay for the cost of health insurance for those employees. Because tax-exempt organizations do not pay income tax to the IRS, the tax credit is reduced from 50 percent of your contribution toward your employees’ premium costs to 35 percent.

To be eligible for the tax credit, your not-for-profit must:

  1. employ fewer than 25 people
  2. pay at least 50 percent of your employees’ health insurance premiums
  3. pay employees an average wage of less than $50 thousand annually
  4. offer coverage to full-time employees through the SHOP Marketplace

The government offers a tax credit estimator to help determine if you qualify for the Small Business Health Care Tax Credit.

Other Requirements

The ACA requires that all employers, including not-for-profits, provide notice to their employees explaining the health insurance options available to them. Nearly all not-for-profits are covered by the exchange notice requirement, except for those with less than $500,000 in annual revenue.

The Department of Labor has provided two samples for all companies to utilize, one for those that DO NOT offer health coverage and one for those that DO offer health coverage.  The notice needs to given to a new employee within 14 days of hire and include:

  • information about the Health Insurance Market Place
  • That, depending on their income and what coverage may be offered by the employer, they may be able to get lower-cost private insurance in the Marketplace; and
  • That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits

Time is running out

It’s imperative to put systems in place to manage the government ACA requirements. Register now for the upcoming ACA webinar, which will cover the requirements for not-for-profits and give an overview of two different software solutions to manage your 1095-C forms.

Both of the solutions you will see integrate directly with Microsoft Dynamics GP, but can also be used as a stand-alone product.

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