Health-Care Regulations Affect Many Employers in 2015

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Employers have many aspects of the Affordable Care Act to track this year, making 2015 an important year for health-care compliance.

Effective Jan. 1, 2015, under the ACA's employer shared responsibility mandate, employers of a certain size must either offer coverage to full-time employees or pay penalties.

Employers that averaged at least 50 full-time equivalent employees during a preceding year are called applicable large employers and are subject to the ACA for a year.

Full-time employees are those who work at least 30 hours a week. Monthly full-time-equivalent employees are determined by adding up all hours of service for employees who are not full time, limited to 120 hours for each worker, and dividing by 120.

These employers must provide affordable health insurance with at least minimum essential coverage or make shared-responsibility payments of $2,000 a year per employee, minus 30 employees, or $3,000 a year for each employee who receives premium tax credits in the marketplace.

The requirements for companies with 50 to 99 full-time employees were delayed until 2016, while the mandate for companies with at least 100 full-time employees took effect Jan. 1.

An additional excise tax on high cost plans goes into effect Jan. 1, 2018. Notice 2015-16, which provides the first guidance on the tax, often called the “Cadillac tax,” was released Feb. 23 by the IRS. Employers with coverage exceeding $10,200 for individuals and $27,500 for families are to be taxed 40 percent starting in 2018.

Final Reporting Forms Released

In 2015, all applicable large employers covered by the ACA are required to collect the pertinent information for Form 1095-B, Health Coverage, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and file them in early 2016 for the previous year. The forms are used to report employee eligibility for employer-provided health-care coverage, employer offers of coverage to eligible workers, and the minimum value amounts of the health plan.

The 2014 versions of the forms were released Feb. 8 by the Internal Revenue Service. Filing of this information is not required for 2014, although the IRS has said it is accepting these forms on a voluntary basis. 

Corresponding transmittal Forms 1094-B and 1094-C and the instructions to the forms also were issued.

Additionally, the IRS released Publication 5200, Affordable Care Act: What Employers Need to Know, and Publication 5196, Affordable Care Act: Reporting Requirements for Applicable Large Employers. The publications help employers prepare for reporting under the ACA.

Small Businesses Granted Relief

Small businesses that do not qualify as applicable large employers for 2014 and the first half of 2015 would not be subject to an excise tax under federal tax code Section 4980D for reimbursing or paying a premium for an employee's individual health insurance policy, the Internal Revenue Service said Feb. 18.

For small employers that are not applicable large employers in 2015, the relief applies from Jan. 1 to June 30, the IRS said.

The agency, in Notice 2015-17, also restated its position from previously issued guidelines, including Notice 2013-54, that pretax reimbursements given to employees to put toward coverage on the individual market will not comply with market reforms established by the ACA.

Despite previous guidelines on employer payment plans, the notice said implementing agencies under the ACA “understand that some employers that had been offering health coverage through an employer payment plan may need additional time to obtain group health coverage or adopt a suitable alternative.”

Legislation to Reform

Bills that would repeal or revise parts of the ACA, such as the employer mandate, have been reintroduced in the Senate and House. However, Republican leaders have yet to fully embrace a single replacement and have not offered programs beyond a working group for dealing with the Supreme Court's anticipated King v. Burwell decision.

In King v. Burwell, the legal dispute before the court focuses on a four-word statutory phrase. The law says people qualify for tax credits when they purchase insurance on an online marketplace “established by the state.” At least 34 states have never established their own markets, and the question is whether people can collect the subsidies even if they buy policies on the federal exchange.

On Feb. 3, the House passed a bill (H.R. 596) to repeal the ACA and that instructs three House panels, including the Ways and Means Committee, to develop replacement legislation within 180 days of the bill's passage.

On Jan. 8, the House passed a bill (H.R. 30) to redefine full-time work as 40 hours a week, up from 30 hours. The full-time definition is critical in identifying which employers must comply with the employer mandate.

The Senate is to vote on a bill (H.R. 22) that passed the House Jan. 6 and would exempt veterans from being counted as full-time employees. The measure was approved Jan. 28 by the Senate Finance Committee.

For more information, see PAG's “Health Insurance: Payroll Responsibilities” chapter.