Affordable Care Act – What is it really all about and how does it impact your business?
Many people assume that The Affordable Care Act is like the W-2 reporting process where you just fill out the forms and send them to the employee and IRS after the last payroll of the year has been processed and the accountants have done their thing.
First, unless your company self-insures, the ACA requirements apply only to companies of 50 or more full-time and full-time-equivalent employees, dubbed Applicable Large Employers in ACA-speak. However, a chain of restaurants or retail stores or any group of companies that have common ownership must total all their employees to determine their filing requirements.
The ACA requires that employers correctly classify employees as Full Time or Part Time based on records of their hours worked during the year. And by law, Full time Employees must be offered a self-only health insurance plan costing the employee no more than 9.5% of their annual gross earnings. The employer may, of course, contribute toward achieving this. Dependent coverage must also be offered but does not need to meet any standards of "affordability." And higher-end coverage may also be offered but are not required to meet the affordability standards, except that the employer contribution must be at least as much as it is for the lowest cost plan.
Insurance companies have a whole new set of insurance plans designed to meet this legal requirement, typically with high deductibles and providing Minimum Essential Coverage (MEC) and Minimum Value as prescribed in the law. And the employer is responsible for presenting the offer of affordable insurance to the employees and for tracking such offers.
So this is not just a case of needing software to fill out a form at the end of the year. It requires active monthly management and tracking employee work hours during ACA measurement periods to insure correct classification of part-time/full-time status and insurance offers. Our ACA software helps you to do this and may also be used to help manage the workforce to avoid "drift" of part-time employees into ACA defined full-time employee status, which is pegged at 30 hours per week or 130 hours per month.
Failure to correctly classify an employee as full time and offer that employee affordable insurance, could end up costing the company tens of thousands of dollars in "Employer Shared Responsibility" penalties, triggered when an employee obtains subsidized insurance from one of the exchanges. The penalties may be applied to all of the employer's employees, not just the ones that were subsidized.
We have created over a dozen new management reports and new data files to allow you to actively manage compliance with the ACA requirements and will shortly begin shipping this new product to our current PBS Payroll users.
A stand-alone version will be available soon after. If you currently use a payroll service, be sure to ask them what they are doing to help you comply with the ACA. The first required reporting period is January of 2016 for the year 2015, much like the W-2s. Also, if you have 250 employees or more, then you be required to e-file with the IRS. Each employee still gets a paper 1095-C form.
I hope that this helps give you an indication of the need for ACA solutions that do more than fill out the forms.
For more information on how Passport’s solution might assist you in managing your ACA compliance, please call Marti Walt at 847-729-7900 Ext. 103 or see out WEB site at www.pass-port.com.
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