Affordable Care Act (ACA)

Preparing for 2016 Affordable Care Act Reporting

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Preparing for 2016 Affordable Care Act Reporting

Preparing for 2016 Affordable Care Act ReportingFor many small businesses, new Affordable Care Act (ACA) reporting requirements are very challenging. With 2015 being the first year for mandatory 1095 filing, devising your reporting plan should be a high priority. Yet a survey of 480+ employers across 36 industries found that just 10 percent had developed strategies ranging from in-house to outsourced solutions. Some 16 percent of respondents had not considered various plans or even determined which options to compare.

Other research found that ACA’s complex reporting requirements are prompting many companies to consider outsourcing. Employer concerns range from not understanding various reporting options and poor data quality to responding to health care exchanges’ notices properly and excessive administrative burdens.

Delaying your decision increases your risk of owing sizable reporting penalties and ACA excise taxes. If this new annual obligation is more than your staff can handle, turning it over to National PEO’s experts can be a big relief. Our comprehensive benefit services include administering medical insurance plans, so our specialists know and follow the latest legal criteria.

Understanding the New System

ACA information returns: Individuals and employers’ shared responsibilities became effective on Jan. 1, 2015, so the IRS needs information returns about individual health coverage. Forms and submitting parties are:

  • 1094-B and 1095-B: Minimum essential coverage (MEC) providers (including health insurers, self-insured plan sponsors, and government agencies that administer government-sponsored insurance programs)
  • 1094-C and 1095-C: Applicable large employers (ALE)

Online return system: You must use the upcoming ACA Information Return (AIR) system to file ACA returns. It is the only IRS e-filing system that supports and processes the above ACA forms.

E-filing: The IRS requires all MEC providers with at least 250 information returns per calendar year to file them electronically. While e-filing is voluntary for providers with under 250 returns, the tax agency encourages everyone to file electronically.

Issuer and transmitter definitions: In the AIR program, “issuer” refers to any MEC provider. “Transmitter” signifies the third-party service that files information returns for an issuer. Any issuers that have not determined if they will use third-party transmitters or e-file their own returns directly to the IRS should make that decision now.

Reporting deadlines: For the 2015 calendar year, your company must give 1095 copies or substitute statements to all employees by Jan. 31, 2016. With staffer consent, you may provide them electronically. IRS paper returns are due by Feb. 28, 2016. The electronic return deadline extends to March 31, 2016.

Penalties: If you do not distribute employee statements or file your information returns on time, the IRS may impose fines. Penalties can reach $500 per untimely return.

Essential Pre-Filing Steps

Preparing for 2016 Affordable Care Act ReportingBefore e-filing, you must complete these four steps. You may do one through three now, but the IRS has not announced final details for Step four yet.

  1. Responsible company official and key contact determinations: A responsible official assumes authority over information return e-filing for a business at a single location and serves as the IRS’s first contact person. Contacts’ responsibilities might include transmitting returns and/or being available for any IRS inquiries every workday. You must designate a minimum of one official plus two contacts.
  2. IRS e-service registration: The IRS must authenticate your officials and contacts. Online registration validates you individually, which allows you to represent your organization or yourself or so you can conduct IRS business electronically. Personal information you must enter includes your adjusted gross income. You will receive a registration confirmation code from the IRS by mail. To finalize your registration, you have 28 days to log into the e-services portal and enter that code.
  3. Transmitter Control Code application: Your third-party transmitter must access e-services to fill out an online Transmitter Control Code (TCC) application. The IRS issues TCCs by mail. Issuers need TCCs only if they are also acting as transmitters. The TCC application became available recently on June 29, 2015.
  4. Testing participation: At a later date, the IRS will require every transmitter to take a communication test and pass it without any errors. That involves preparing an XML-formatted transmission, submitting it for IRS processing, getting a receipt confirmation ID, and then receiving an acknowledgment that may include an error file attachment if applicable.

Once you have completed those four prerequisites, you are ready to file your ACA information returns electronically. According to the IRS, AIR should become operational during the fall of 2015. To enlist help from experienced benefit professionals, contact National PEO today at 888-221-0945.

Hobby Lobby & You

by National Peo National Peo No Comments

Hobby Lobby and You: How the Supreme Court’s Ruling Affects Your Company

Hobby Lobby and YouPresident Barack Obama faced a mountain of obstacles when he signed his revolutionary health care reform into law in 2010, and though plenty of previously uninsured or underinsured citizens are finally receiving crucial health care services, there are still some intricacies to work out. At the end of June, a new issue with enforcing the ACA came to the forefront of the political stage, and its effects on the way the ACA works for companies are still being sorted out.

The Contraceptives Debate

On June 30, in the case Burwell v Hobby Lobby Stores Inc, the Supreme Court issued a ruling that stated family-run companies need not abide by the ACA’s mandate that companies must provide their employees contraceptives or else face financial penalties.

The companies (or families) who brought the case to court were the Greens of Hobby Lobby fame and the Hahns who own a cabinet-making company. Both families hold their companies closely and choose to run them with Christian ideals in mind; thus, these families take issue with providing their employees contraceptives when these medications contradict their firmly held beliefs against abortion. The case effectively challenged whether a federal law can become exempt when it opposes with a company’s religious opinions.

With the First Amendment and the 1993 Religious Freedom Restoration Act on their side, the Greens and Hahns argued that their corporations engaged in religious exercise and thus should be as free from the restrictive mandates as not-for-profit organizations, like churches and other religious institutions, are. Despite the governments opposing statements that the Greens and Hahns do not personally employ their workers — Hobby Lobby and the other companies do — the court ruled in favor of the families, stating that these particular companies are “closely held” and thus are subject to protection under the 1993 law.

Did This Strike Down the Contraceptive Mandate?

Though the Supreme Court ruling did affect some companies’ adherence to the ACA contraceptives mandate, most corporations are still required to provide their employees coverage of all contraceptives under their company health plans. This ruling applies only to these two families and the companies they hold, though it has the potential to spread to other “closely held” companies in the future, depending on the federal definition of “closely held.”

Are Other Companies Challenging the Mandate?

There are other court cases still in proceedings that challenge the ACA’s contraceptive coverage requirements. More than 50 for-profit companies have lodged complaints seeking relief from the penalties and fines. Many of these cases have been on hold while the Supreme Court drafted their opinion on the Hobby Lobby case, and now that a ruling has been published, the lower courts can evaluate the claims from these other corporations to determine their adherence to the ACA’s rules.

Moreover, 300 individual not-for-profit organizations, including schools and charities, are fighting the mandate, and 100 strictly religious organizations continue to test the boundaries of various ACA mandates. Many of these may come before the Supreme Court in the coming months. These not-for-profits are likely to see positive rulings, as in the past few months, the federal and lower courts have ruled against the ACA in 28 out of 34 cases.

Hobby Lobby Contraceptive What Does This Mean for Company Health Plans?

The Greens and Hahns must continue to comply with the majority of the ACA’s health care mandates, and in fact Hobby Lobby continues to provide 16 contraceptive options to its female employees — only those that contradicted the family’s views on abortion were stricken from the list. Many family businesses will be able to take these contraceptive options out of their employee health care packages, but they and all small, medium, and large corporations must continue to provide sufficient health care options.

Are There Other Challenges to the ACA?

As we mentioned in the introduction, the ACA has a seemingly unending list of obstacles it must tackle before it is fully functioning. As with any new governmental regulation, there will be a number of issues that must be worked out before things start running smoothly.

Though this case was careful to outline that it pertained only to a specific handful of contraceptive options mandated by the ACA, plenty of other health care requirements, for example vaccinations and blood transfusions, are being challenged in courts.

Plus, many suits are being filed regarding other aspects of the ACA legislation. Members of Congress are currently exempt from penalties and fines, a law many businesses are finding unjust. Most recently, federal subsidies are coming under question in the courts as contradicting rulings are being issued that threaten to dismantle the whole system. It’s clear that for many years yet we can expect to fine-tune the ACA and make it suitable for every citizen and organization.

Explanation of ACA Exemptions

by National Peo National Peo No Comments

All About the ACA Exemptions

ACA ExemptionsA key provision of President Obama’s landmark legislation, the Affordable Care Act, went into effect this March, meaning that almost every American citizen must be covered by health insurance or face an additional tax amounting to the greater of 1 percent of yearly income or $95 with the amount increasing each year. Experts predict, however, that as many as 30 million Americans still won’t have coverage by 2016 and most of them won’t be required to have it. The ACA has built into it certain exemptions that allow certain groups to skirt the health insurance mandate, so roughly 23 million of those uninsured don’t have to worry about procuring coverage or incurring fines.

Exemptions are a tantalizing aspect of the ACA, but only certain specific groups qualify for them. If you’re confused or concerned about the ACA’s exemption policies, read on to find out everything you need to know. If you think you could qualify for an exemption, contact your PEO to determine your next steps.

Who Doesn’t Have to Pay Penalties?

Though the government makes it sound like absolutely everyone must obtain health care coverage under the ACA or else be punished with extra fees, this is not the case. The government has made room for certain individuals or organizations for whom it would be impossible, unfair or unconstitutional to make participate in the program.

American Indian groups don’t have to seek coverage to avoid penalties if they are members of a Federally recognized Native American tribe, identified by the Department of the Interior.

Additionally, religious groups that participate in health care sharing are exempt from the ACA. These organizations are typically ministries that pool members’ savings to pay for the expenses of anyone in the group who needs medical care, perhaps due to illness, injury, or pregnancy. These groups are practically creating their own insurance by promising to cover any one member who needs their aid.Some religious groups also receive reprieve from the mandates of the ACA due to religious objections.

Finally, there are quite a few different types of individuals who don’t have to worry about complying with the ACA. These include:

  • Citizens who are incarcerated — detained or jailed — and not awaiting disposition of charges
  • Citizens who are only uninsured for fewer than three months of the year
  • Individuals who are not lawfully in the United States
  • Citizens who do not earn enough income to file taxes or who have suffered a hardship during the previous year

This last category will be explored more in the next section.

Affordable Care Act ExemptionsWhat Are Hardship Exemptions?

Poverty is ever-present in every country, and with the ACA the U.S. has chosen not to punish those experiencing certain financial hardships with the additional strain of finding and paying for health insurance. Individuals who endure certain circumstances that prevent them from procuring health insurance are thus exempt from the individual shared responsibility payment. These circumstances are determined every year by the Health and Human Services Secretary, and this year there are 14 unique situations that earn an individual freedom from participating in the ACA. You might consult an expert to verify your exempt status if:

  • You were homeless — under the federal definition of homelessness
  • You were evicted or foreclosed upon during the previous six months or were facing eviction or foreclosure
  • Your utilities were shut off
  • You were the victim of domestic violence
  • You survived the death of a close family member — which typically is confined to the nuclear family
  • Your property was severely damaged, perhaps by fire, flood, or some other natural or human-induced disaster
  • You filed for bankruptcy during the previous six months
  • You struggled to pay off extensive medical payments during the past year, bringing you into debt
  • You began caring for a family member suffering from illness, age, or other disability and thus incurred substantial and unexpected expenses
  • Your child lacks health coverage due to denial in the Medicaid and CHIP programs and failure to provide medical support by another party, most likely a separated spouse
  • You became eligible to enroll in a qualified health plan after a period of lack of coverage
  • You became unable to receive benefits from Medicaid because your state did not expand Medicaid benefits under the ACA
  • Your insurance plan was cancelled, and other plans in the Marketplace are unaffordable

One last hardship exemption is a bit of a wildcard; its purpose is to allow groups or individuals to approach lawmakers with various possibly overlooked obstacles to obtaining insurance. Because lawmakers cannot predict every single potential hardship a citizen may face during the course of a year, they have allowed an opportunity for people to submit their own hardships to exempt them from the penalties.


Here’s What Your Business Should Know About the ACA

by National Peo National Peo No Comments

The implementation of the Affordable Care Act’s Employer Mandate is just a year away, and many business owners still don’t quite understand what their obligations are under the new law. If you own a small to mid-size business, your obligation to provide health care coverage to your employees will depend on how many full-time workers you employ and what their average annual wages are.

Who Qualifies as a Full-Time Employee Under the ACA?

If your business employees fewer than 50 full-time employees, you will not need to offer health care coverage under the ACA Employer Mandate. You should know, however, that for the purposes of the ACA, a “full-time employee” is someone who works 30 hours a week or more over a given month. You can look back over the past three to 12 months when calculating who is not a full-time employee. Employees who work fewer than 30 hours a week on average during the look back period are considered part-time employees.

What Does “Full-Time Equivalent” Mean?

The ACA acknowledges that very large firms may choose to cut employee hours in order to save on health care. The law attempts to nip this practice in the bud by requiring businesses whose total employees have worked the equivalent of 50 full-time employees’ hours to provide health care coverage for all full time employees. Under this requirement, businesses will have to add up all part-time employees’ paid hours for a given week and divide them by 30, the number of hours a full-time employee works in a week under ACA guidelines. The resulting sum is the number of “full-time equivalent” employees the business has.

For example, if your business employs 20 part-time workers at 24 hours a week, for a total of 480 part-time employee hours a week, those 20 workers can be said to be the equivalent of 16 full-time workers, because 480 divided by 30 equals 16. Add your number of full-time workers on to that number. For example, if you have an additional 30 full-time workers, you add that number to your full-time equivalent number, to arrive at your total full-time equivalency of 46 workers. If this business were yours, you would not be required to provide health insurance under the Employer Mandate.

Which Businesses Need to Provide Health Insurance to Their Employees?

Starting in 2015, all businesses with 50 or more full-time employees, or the combined equivalent thereof, will need to start offering health insurance coverage to their employees. The insurance you provide must meet certain guidelines established by the ACA — it must provide minimum coverage equal to the bronze plan available on the health care exchange, and it must be affordable.

What constitutes affordability? Your employees should be paying no more than 9.5 percent of their yearly income for health insurance coverage for their entire family. While you can’t really know what any employee’s yearly income is — after all, they’re probably getting income from a spouse, investments or a second job — you can make sure you’re in the clear on the affordability requirement by offering insurance that costs less than 9.5 percent of each employee’s yearly salary.

How can you tell if the insurance plan you choose offers minimum coverage? Minimum coverage is coverage that’s equivalent to a bronze plan on the marketplace, which must cover a minimum of 60 percent of health insurance costs on average. If you have under 50 employees, you can choose coverage from the Small Business Health Options Program, or SHOP Exchange. Coverage purchased on this exchange should meet the minimum coverage requirements and you may be eligible for a tax credit. You may want to get help from a professional employer organization (PEO) in navigating SHOP and choosing a plan that meets your employees’ needs and those of your business.

How Can You Prepare for the ACA Employer Mandate?

Start preparing for the ACA Employer Mandate in 2015 by talking to your staff about their coverage preferences. Staff members getting insurance through their spouses may already be satisfied with their coverage, but there’s a good chance many of your employees have questions and concerns. Find out what your employees want and need in a health care plan. This will guide you in choosing the best plan for everyone’s needs.

Spend the next year putting together your plan of attack for when the Employer Mandate rolls out in 2015. Don’t wait for changes or further delays to occur — you could be left high and dry without a health care plan for your workers. Ideally, you want to have a strategy by mid-summer 2014 so you can educate your employees about their new health care options. Get help from a PEO to go through your options on the public and private exchanges. When you enlist the help of a PEO, you won’t have to worry about compliance issues cropping up down the road.

Don’t wait till the last minute to comply with the ACA’s Employer Mandate, contact a National PEO representative to help you with the transition. The sooner you’re ready for the implementation next year, the smoother it will go for your business.