Employer Shared Responsibility Act

Tax News: Due Dates For ACA Forms Extended

Back in November, we published a blog post notifying large employers that the Employer Shared Responsibility provision of the Affordable Care Act (ACA) would take effect in 2016. The provision requires businesses that employed at least 50 full-time employees or full-time equivalents (FTEs) in 2015 to report on the health insurance coverage they offered to their staff.

Employers report the health coverage they provided using Forms 1095-C and 1094-C. However, the IRS recently delayed the due dates for these forms.

The 1095-C due date is now March 31, 2016: 1095-C forms (Employer-Provided Health Insurance) are provided to employees and outline the coverage offered to them in 2015, including the lowest-cost premium they could select and the months of the year the coverage was available. Employees submit their 1095-C form with their individual tax filing.

Businesses were previously required to mail 1095-C forms to each employee that was eligible for health insurance coverage in 2015 by January 31, 2016.

The 1094-C due date is now May 31, 2016: The 1094-C form (Transmittal of Employer-Provided Health Insurance) is a cover letter businesses send to the IRS that consists of their contact and identification information, as well as a list of eligible employees who were sent 1095-C forms.

Businesses were previously required to submit their 1094-C form to the IRS by February 29, 2016.

Missing these due dates or making mistakes on these forms can result in a minimum penalty of $100. Fortunately, large employers now have an additional two months to meet their requirements under the Employer Shared Responsibility provision. If you use payroll software or work with an outsourced payroll provider, there’s a good chance they’ll automatically generate these forms for you, much like they do with W-2 and 1099 forms.

The Affordable Care Act: Should You "Pay or Play"?

By Lauren Crum  Email Lauren

As the Affordable Care Act (ACA) continues to take effect, certain employers will need to decide if they should “pay or play.” This one-or-the-other scenario is a simple way to sum up the decision many businesses face under the Employer Shared Responsibility Provisions of the ACA. Should you provide your staff health coverage (play) or instead pay a tax penalty that goes towards funding the public health insurance marketplace (pay)?

Who does the Employer Shared Responsibility Provisions apply to?

The Employer Shared Responsibility Provisions went into effect this year, requiring businesses with 100+ full-time employees to chose whether to “pay or play.” Starting in 2016, employers with 50-99 full-time equivalent employees will also be required to choose one or the other.

If your business meets this criteria, you’ll face a big decision next year and beyond. With the right research and planning, you can make an informed choice that could potentially save your business thousands of dollars.  

So should I “pay or play”?

In order to figure out the best course of action for your business, the first thing you must do is identify your full-time employees. Full-time employees are those working an average of 30 or more hours per week. You’ll then need to determine how many "full-time equivalent" (FTE) employees you have on staff. FTEs are calculated by adding all the part-time employee's hours and dividing the total by 30. If the sum of full-time employees plus full-time equivalents is more than 50, your company is subject to the Employer Shared Responsibility Provision for 2016.

The next step is to project the costs your company would likely spend on healthcare for your full-time staff. Start by taking a census of your full-time employees to determine who is covered under a spouse's or parent's plan (which excludes the employee from being covered under your plan). Then, ask the employees who are not covered if they plan on choosing health coverage under your company’s plan for the upcoming year. Once you have the number of interested employees, your health insurance broker can use this information to give you a projection of costs for your company.

Your company can use these projections to determine the most cost-effective way to offer your employees health coverage and comply with the ACA. If you decide to play, BookKeeping Express (BKE) provides services to help you onboard new hires and enroll them in benefits when they become eligible. If you decide to pay, you will need to make monthly payments to the IRS throughout 2016 based on the full time employees you have on staff. Most major payroll providers offer services to track full-time employees and submit the required reports to the IRS. If you don't currently work with a payroll provider, contact BKE and we'll help you get started.

It's Time For Large Employers To File New ACA Forms

By Lauren Crum  Email Lauren

2016 marks the first year that large employers will have to report on health coverage offered to their staff under the Employer Shared Responsibility provision of the Affordable Care Act (ACA). You are considered a large employer if you employed at least 50 full-time staff members during 2015, including full-time equivalent employees (FTEs). The ACA’s employer mandate, which fines companies who do not offer health benefits to full-time employees, only applied to companies with more than 100 employees for 2015. That means if you employed between 50 to 99 full-time employees or FTEs in 2015, you won’t face fines for not offering health benefits, but you are required to report on any coverage you did (or did not) offer by using new IRS forms.

In order for your company to complete the required forms, it’s beneficial to start gathering information now since it could be scattered across multiple systems and administrative areas. You’ll need the following information to complete the reporting:

  • Full-time employee names
  • Employee addresses
  • Health coverage offered to employee, if any
  • Employee’s share of monthly premium
  • Number of months employee was enrolled in coverage
  • Full-time employee counts by month
  • Total employee counts by month

There are two key forms that employers must complete by certain dates in order to report on health coverage provided in the previous year.

Form 1095-C  by January 31, 2016: Employers must provide a 1095-C form (Employer-Provided Health Insurance) by mail to the last known permanent address of all employees eligible for coverage in 2015, whether the employee participated in the coverage or not. This form provides details about any coverage offered to the employee, the lowest-cost premium available to them, and the months of the year when the coverage was available. The employee will then attach this form to their tax return for 2015.

Form 1094-C by February 29, 2016: Employers must file a 1094-C form (Transmittal of Employer-Provided Health Insurance) with the IRS by February 29, 2016. This is a cover letter to the IRS and includes information about the employer such as address, phone number, employer identification number, number of employees, and name of a contact person. This form also summarizes the eligible and covered employees that were sent Form 1095-C.

Preparing these forms can be a little intimidating. However, if either of these forms are filed late or are inaccurate, there is minimum penalty of $100 for each. If you are a large employer and use a payroll provider, they’re likely your best resource for assistance with your reporting. Most payroll companies now provide services that track your employee’s eligibility for health benefits and will generate the 1095-C and 1094-C forms, much like they do for your W-2s or 1099s.