On June 25, the U.S. Supreme Court rendered its second ruling on the ACA since 2010, this time upholding tax subsidies for federally-facilitated exchanges. The whole issue was over a four-word phrase in the law that says subsidies are available to those buying insurance on exchanges “established by the state,” and whether that phrase had been properly interpreted by the Obama administration in allowing subsidies on the federal exchanges. The Court agreed that the law was vague, but sided with the Obama administration on its intent, providing a huge victory for the ACA and a sigh of relief for approximately 6.4 million Americans who purchased health insurance through a federally-run exchange.
What does the decision mean for employers and their HR compliance?
For the diehard employers out there who were hoping the ACA would simply go away, the ruling means the ACA is here to stay (at least for now). For employers who have held off on signing benefit contracts or postponed making changes to plans, it’s time to move forward. And for large employers, HR compliance with upcoming IRS reporting requirements is a high priority. In short, the SCOTUS decision should signal to employers that the ACA is moving ahead, and it’s time to focus on HR compliance dates and reporting deadlines.
Here’s a quick rundown of upcoming ACA HR reporting requirements:
- PCORI fees. As part of the ACA, employers are required to pay a Patient Centered Outcomes Research Institute (PCORI) fee by July 31, 2015. The fee is either $2 or $2.08 per employee for the average number of employees in the prior year, depending on the end date of your plan year. If the end date falls between January 31 and September 30, 2014, the fee is $2 per employee; if the end date is October 31, 2014, or later, the fee is $2.08 per employee. You’ll need to complete IRS Form 720 to report and pay the fee. You can get help calculating your fee online at www.benelect.com/ppaca.
- Change in definition of “small business.” The ACA will redefine “small businesses” as those with 100 or fewer employees as of January 1, 2016. As employer groups with 51 – 100 employees renew their health insurance, or purchase new insurance, in the 2016 plan year, they must abide by the rules and regulations governing the small group market, including those related to benefit coverage and age rating.
- IRS reporting requirements. Applicable large employers (ALE) are required to provide an annual statement to each full-time employee detailing the health coverage offered for the calendar year by January 31st of the following calendar year. For the 2015 calendar year, all ALEs must furnish FORM 1095-C by February 1, 2016. ALEs must use transmittal Form 1094-C to file copies of the 1095-C forms with the IRS by February 29, 2016, (March 31, 2016, if filing electronically). Employers of ALL sizes, including non-ALEs that provide coverage under a self-insured plan are required to furnish Form 1095-B to covered employees and file with the IRS Form 1094-B and all Forms 1095-B by the same dates as noted above.
- Changes in out-of-pocket max. Health and Human Services (HHS) set the out-of-pocket (OOP) limits for 2016 at $6,850 for self-only coverage and $13,700 for other than self-only coverage. They also confirmed in May 2015 that, effective for plan years beginning in 2016, non-grandfathered self-insured and all large group health plans must apply an embedded self-only out-of-pocket maximum to each individual enrolled in family coverage.
- Cadillac tax. All employers will be subject to an excise tax on “Cadillac” health plans effective January 1, 2018. The Cadillac Tax is a 40% non-deductible excise tax on the cost of employer-sponsored health coverage that exceeds predetermined threshold amounts. Currently the threshold amounts are set at $10,200 for individual coverage and $27,500 for family coverage.
Do you have a roadmap for HR compliance?
With so many new requirements, employers need a strategy for how they’ll prepare their workforce for these changes, how the changes will affect their business operations, and what they need to do to stay compliant. Need help creating your roadmap? Contact the experts at BeaconPath.
Need help with completing forms 1094-C & 1095-C? Download BeaconPath’s 2016 Employer Reporting Requirements for complete instructions. This free reference manual is an invaluable guide for employers.