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ACA Penalties: Insurance Inadequacies Can Cost You

Offering employees health insurance is not enough to avoid the penalties associated with the shared responsibility requirements of the Affordable Care Act (ACA).  While many large employers already provide what they believe to be a good health plan for employees, the ACA has set the standard for what is considered adequate and affordable coverage as well as the penalties for non-compliance.

Health Insurance is considered inadequate if it pays less than 60 percent of covered health care expenses and unaffordable if employees have to pay more than 9.5 percent of their household income for single coverage. Since most employers do not have a way of tracking their employees’ household income, the IRS has provided employers a safe harbor whereby they will be considered as having met the insurance affordability obligation if the employee’s insurance is less than 9.5 percent of the employee’s Form W-2, Box 1 income.

In 2014, employees without adequate and affordable coverage can turn to a Health Insurance Marketplace, also known as an exchange, to find and compare private health insurance options. If even one of your employees elects coverage through the exchange, you could be fined an annual penalty of up to $3,000 per full-time employee, or $2,000 per total number of full-time employees (not counting the first 30 employees), whichever is less. The employee’s eligibility for the exchange is also dependent on the employee’s household income. Generally, those who make between 100 and 400 percent of the poverty level would qualify. For 2012, the poverty level was $23,050 for a family of four.

As you can see, for large employers simply providing insurance may not be enough to keep you ACA compliant. Something else to note is that even if you do provide adequate and affordable health insurance to your employees, the ACA and Fair Labor Standards Act (FLSA) still require you to notify employees of the coverage options for the Health Insurance Marketplace.

Sign up for our webinar – Think Your Business is ACA Compliant? – and read our ACA blog post on “Companies with Employer-Sponsored Health Plans Must Still Notify Employees of Exchanges” to learn more.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.



Author Bio: Newman Wells is a writer, designer and entrepreneur with over 20 years of corporate marketing experience. Passionate about B2B marketing, Newman Wells specializes in helping businesses define their value propositions by simplifying technical jargon for easier-to-digest messages that drive sales. She has spent the last two decades building successful marketing departments from the ground up and has been Paycom's director of marketing since 2005.

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Affordable Care Act Subsidies Upheld: What You Need to Know

Yesterday, in a 6-3 decision, the U.S. Supreme Court upheld the federal subsidies of the Affordable Care Act (ACA) by ruling that the tax credits for health insurance are authorized in the 34 states that have a federal marketplace.

As a result, subsidies will remain available for qualifying individuals, regardless of whether they obtain coverage on a state or federal exchange.

What This Means for Employers

Because the Supreme Court ruled in favor of the federal government’s position, individuals will remain eligible for subsidies. However, employees eligible for employer-sponsored health plans may not be eligible for subsidies through the marketplace, so long as the employer-sponsored plan meets affordability standards under the ACA.

Employees are eligible to pursue health insurance through the marketplace only if the employer does not provide coverage that the ACA considers “affordable” (if the employee’s share for the lowest-priced plan does not exceed 9.5 percent of his or her annual household income) and meets the ACA’s standard of providing “minimum value” (by paying at least 60 percent of the cost for medical services).

Employers should continue to take control of their ACA compliance. All requirements remain as usual. Employers held to the ACA mandate still must handle reporting data to include the measurement, stability and administrative period. For Applicable Large Employers (ALEs), filing with the IRS remains mandatory and statements must be provided to full-time employees regarding health coverage.

Cadillac Tax: Still an ACA Hot Topic

In addition, employers with high-cost health plans may wish to consider paring back benefits in order to dodge the 40-percent excise tax that goes into effect in 2018. This so-called “Cadillac tax” applies to plans in which benefits exceed $10,200 for individuals and $27,500 for families.

Experts estimate that 60 percent of employer plans will exceed the individual and family limit by 2018.

Compliance Tools   

When it comes to the ever-complex, ever-changing ACA, more than two-thirds of businesses still are not compliant. Paycom can erase the concerns by eliminating the threat of noncompliance.

For compliance free of pain, stress and costly fines, our new Enhanced ACA solution offers the convenience of having all your ACA data in a real-time dashboard, plus Forms 1094/95-B or -C are filed with the IRS timely and accurately on your behalf.

Add Paycom’s Enhanced ACA to your all-in-one human capital management solution today.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.



Author Bio: A writer, speaker and young business leader, Jason has been the communications pulse for a number of organizations, including Paycom. A featured writer on human capital management technology, leadership and the Affordable Care Act, Jason launched Paycom’s blog and social media channels, helping empower organizations around the nation. Jason is attuned to the needs of businesses and recently helped develop a tool to aid organizations in their pursuit to comply with the ACA; one of the largest changes in healthcare the country has seen. While working in athletics for ESPN and FoxSports, Jason learned the importance of hard work and branding. In his free time he enjoys adventuring with his family, reading and exploring new areas to strengthen his business acumen.

3 ACA Reporting Alternatives

3 ACA Reporting Alternatives Unraveled

For many organizations, the employer mandate and the reporting requirements of the Affordable Care Act (ACA) loom. Employers want to ensure they will be in compliance come January 2016, when the required forms are due to their full-time employees and the Internal Revenue Service.

Yet many organizations remain confused by the law’s many complexities, especially those related to the reporting provisions. In fact, two-thirds of business executives who have attended Paycom’s ACA webinars in the past four months reported they are not ready to comply with the 2015 reporting requirements!

As staggering as that statistic is, it is important that organizations understand options exist for ACA reporting. You might be surprised to learn which method is best suited for your organization.

Who’s Set to Report?
Starting this year, Applicable Large Employers (ALEs) – organizations with 50 or more full-time or full-time-equivalent employees – will be held to the mandatory filing, which reports the details of health coverage offered to those employees.

The ACA’s “general reporting” method is completing, in its entirety, IRS Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance. This form must be filed with the IRS for every employee determined to be full-time for at least one month during the calendar year. Additionally, employers must provide either a copy of Form 1095-C or an alternate statement to affected employees by Jan. 31 of the year following the year the insurance was offered.

In an effort to simplify reporting requirements in certain situations, the IRS now allows three optional alternative methods:
1. The Certification of Qualifying Offer
2. The Simplified Statements for 95 Percent Offer
3. The 98 Percent Offer

The Certification of Qualifying Offer
This states that in lieu of Form 1095-C, eligible employers are allowed to certify that they extended a “qualifying offer” of health care coverage to employees, as long as the offer provided minimum essential coverage to them, their spouses and dependents, and that the cost of the coverage did not exceed 9.5 percent of the federal poverty level for employee-only coverage.

This report will include the name, address and Social Security number of each full-time employee, along with the indicator code of “1A” from line 14 of Form 1095-C. This code signifies that the employee received a qualifying offer for all 12 months; no other details are required.

The information provided to employees through either a copy of the Form 1095-C or a general statement in a format “prescribed by the IRS” must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for all of those 12 months.

Most employers wishing to use this alternative method will have to furnish a mixture of simplified and general reports to their workers and the IRS, as not all employees will have been with the company for the full, 12-month span.

However, it is important to note that organizations will not know until the end of the year whether simplified reporting can be used for any individual employee; therefore, it is important to maintain records of ACA-required data – affordability, minimum coverage offered and employee full-time status – in order to ensure compliance.

The Simplified Statements for 95 Percent Offer
Available for 2015 only, this alternative allows certain employers to provide a “general statement” in lieu of filing Form 1095-C. They must certify on Form 1094-C that they have made qualifying offers to at least 95 percent of their full-time employees, their spouses and dependent(s).

The information provided to employees through a “general statement” must be in a format “prescribed by the IRS” and must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for any of those 12 months.

These statements may vary, depending on whether the employee received a qualifying offer for all, some or none of the months. Thus, if the qualifying offer did not apply to an employee for the entire 12 months, the statement likely will inform them that any of the aforementioned entities may be eligible to claim a premium tax credit for any month in which a qualifying offer was not made.

Additionally, the statements must supply a contact name — which can be a member of the ALE or a third-party administrator — and telephone number, should an employee wish to call for additional information.

The 98 Percent Offer
For employers who offer qualifying coverage to at least 98 percent of their full-time employees, this third reporting alternative is available. It does not excuse them from submitting Form 1095-C, but does allow them to bypass two data points on Forms 1094-C and 1095-C:

  • the month-to-month full-time status of employees
  • and the monthly total of full-time employees.

Employers who offer coverage to “substantially all” of their full-time employees may lessen the burden on themselves to track and record hours of service in order to identify the number of full-time employees for each month. Because Form 1094-C appears to require reporting of members ranked by full-time employees, it isn’t clear whether or not this option is possible for aggregated groups.

Are the General Statements Useful?
For many, the general statement may cause more confusion than it’s worth; it may be simpler for employers to distribute a copy of Form 1095-C.

Also, it is possible that taxpayers may need to enter information from Form 1095-C on their year-end personal income tax returns, so those receiving the general statement may have to contact their HR department to obtain that information. While the IRS has not yet given guidance on the format of these statements, the bureau does require both an employer contact name and phone number for verification purposes.

The Simplified Ending
In closing, the simplified reporting alternatives may prove useful for a number of organizations, but a lot remains up to the interpretation of the law and each business’ ability to anticipate if it will be eligible to use these alternatives. If you are among the two-thirds of businesses not ready to comply with the 2015 reporting requirements, it is in your best interest to talk to a Paycom representative today.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.



Author Bio: A writer, speaker and young business leader, Jason has been the communications pulse for a number of organizations, including Paycom. A featured writer on human capital management technology, leadership and the Affordable Care Act, Jason launched Paycom’s blog and social media channels, helping empower organizations around the nation. Jason is attuned to the needs of businesses and recently helped develop a tool to aid organizations in their pursuit to comply with the ACA; one of the largest changes in healthcare the country has seen. While working in athletics for ESPN and FoxSports, Jason learned the importance of hard work and branding. In his free time he enjoys adventuring with his family, reading and exploring new areas to strengthen his business acumen.

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Ready or Not, IRS Finalizes ACA Forms

The time has arrived for employers impacted by the eligibility reporting requirements of the Affordable Care Act (ACA), as the IRS officially released the 2014 versions of the final forms and instructions on Feb. 8. Posted were the following forms, which fulfill the reporting requirements under ACA sections 6055 and 6056:

  • Form 1094-B, Transmittal of Health Coverage Information Returns;
  • Form 1095-B, Health Coverage;
  • Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer Coverage Information Returns; and
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.

Applicable large employers (ALEs) – those with 50 or more full-time or full-time-equivalent (FTE) employees – will be held to the mandatory filing; however, some organizations may receive transitional relief based on:

Regardless, all ALEs are required to file these forms with the IRS and provide statements to full-time employees about health coverage, even if the employers are not required to offer affordable coverage that meets minimum essential coverage or value in 2015.

Information reporting is voluntary for 2014, but all ALEs must submit the forms in early 2016 for calendar year 2015. It is anticipated that the IRS will release the 2015 version of the forms by the end of this year.

If you are a Paycom client, the submission and distribution of these mandatory forms can be done easily through the ACA Dashboard. Paycom’s ACA Dashboard streamlines reporting requirements as users can analyze their information to ensure they are in compliance with the new federal guidelines. In addition, the ACA Dashboard can be autopopulated with an employer’s existing data, and this data also can be autopopulated into the required IRS forms. The ACA Dashboard is provided free of charge to all clients; filing of the forms for 2015 can be done on your behalf for a small fee.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.

ACA-ToolKit



Author Bio: A writer, speaker and young business leader, Jason has been the communications pulse for a number of organizations, including Paycom. A featured writer on human capital management technology, leadership and the Affordable Care Act, Jason launched Paycom’s blog and social media channels, helping empower organizations around the nation. Jason is attuned to the needs of businesses and recently helped develop a tool to aid organizations in their pursuit to comply with the ACA; one of the largest changes in healthcare the country has seen. While working in athletics for ESPN and FoxSports, Jason learned the importance of hard work and branding. In his free time he enjoys adventuring with his family, reading and exploring new areas to strengthen his business acumen.

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