The ACA Employer Mandate – a refresher PART 1

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All the recent activity around ACA repeal/ replace has created a lot of confusion for employers. The net outcome of this has been…nothing. The ACA - including the employer mandate – stands, at least for the foreseeable future and definitely for 2017.

With 2017 tax reporting coming up, now is a good time to recap what the employer mandate is and who needs to abide by it. This is part 1 of a 2 part blog, covering who needs to comply and what they need to do to be compliant and by when. Part 2 will dive into the associated penalties for non-compliance.

Who needs to be ACA Compliant?

All Applicable Large Employers (ALE) are subject to the employer mandate. An ALE is defined as a US employer with 50 or more full-time employees (or equivalents) in the previous tax year. Commonly controlled and affiliate companies are treated as one group for determining ALE status so they must combine their full-time employee counts.

Learn more by watching our video: Does Your Business have to comply with the ACA?

What do you need to do to be compliant? And when?

There are 2 levels of ACA compliance for employers:
1) Compliance with the Coverage Mandate
Employers must be timely in offering health insurance of certain quality to full time employees on a periodic basis (typically monthly) or risk penalties. So, employers must offer a “Qualified” Plan to their employees to avoid penalties. This means the plan must offer:

  • Minimum Essential Coverage (MEC)
  • Minimum Value (MV): the plan must pay at least 60% of the costs of benefits
  • Affordable Coverage: A plan is considered affordable if the employee’s required contribution does not exceed 9.56% (this amount is adjusted annually based on the federal poverty line %)

To check whether a plan meets MEC and MV standards – which have their own intricacies – consult a knowledgeable insurance broker
2) Compliance with the IRS Reporting Requirements
Employers must prove the right offer was made to the right employee at the right time at year-end. They do this by providing the IRS with a form 1095-C for each full-time employee and then sending copies of these along with a 1094-C to the IRS. Employers must also report these offers to employees by sending a copy of the 1095-C to the employee directly.

Learn more by watching our video How do I comply with the ACA? and What is a 1095-C?

The ACA Employer Mandate – a refresher PART 1

Our next blog will talk about what the penalties are if employers do NOT comply with the employer mandate and if the IRS really is going to pursue them – especially under the current administration.

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