The Affordable Care Act has caused a wave of changes in how consumers can access health insurance, as well as requirements for employers. In 2015, the employer mandate took effect, requiring companies with 100 or more full-time or equivalent employees to offer coverage, but this isn’t the only thing you need to worry about. Even now that ACA open enrollment is over, employers need to stay on their toes. Compliance is a constant process, and many companies aren’t prepared to meet the future requirements of the health care law. In 2016, applicable large employers will need to meet the information reporting requirement for 2015, according to the National Law Review. IRS Forms 1094 and 1095 must be filed in early 2016 to maintain compliance.
Even though it may seem like your organization just got up to speed on the other aspects of the ACA, you need to consider the future reporting requirements now to ensure you are able to meet them when they take effect. For many companies, this may mean better data collecting and storing practices.
What Are the Information Reporting Requirements?
Because many components of the ACA have come into effect in the past two years, employers will need to both provide coverage and report this data for the previous year to the IRS. The reporting requirements mainly apply to insurance companies, as well as employers that sponsor self-insured group health plans. Businesses are not required to report minimum essential coverage for 2014, even if an employee asks for a statement. The reason behind this requirement is the individual mandate, which requires people to have health care coverage or pay a tax penalty. The reporting gives them verification of coverage.
Although separate from this requirement, a related part of the ACA makes employers to submit returns about the coverage offered to full-time employees to the IRS. Some companies may need to report information about workers who aren’t full-time or any covered dependents. Written statements must be issued to employees within a certain timeframe, similar to W-2 forms. This makes it easier to enforce the employer shared responsibility requirement and premium tax credits for individuals. Some organizations may need to report on retirees or non-employees covered by COBRA.
Employers need to be aware of the applicable requirements for their companies and the forms they need to file in early 2016. It’s important to take stock of these mandates now so you can be sure you collect the right information all year.
Are You Ready for the Reporting Requirements?
Some of the new requirements for the ACA come with financial penalties for noncompliance, but many companies aren’t ready, Employee Benefit News stated. Citing data from an Ernst and Young Poll, the article said 25 percent of employers aren’t prepared to meet all the requirements of the ACA. Fifty-six percent were only partially ready.
Part of the issue is responsibilities for data reporting and compliance have shifted hands. In the past, tax and finance departments depended on human resources to manage compliance requirements, but financial professionals will need to be involved with the new requirements. These managers already have a huge range of responsibilities, so they are focusing on the most important elements first. In addition, the ACA faced a great deal of opposition and there were discussions of repealing it, meaning that many companies waited until they were sure the complex law was going to stick around before they started preparing.
How to Prepare for New ACA Requirements
There is still time to get ready, and most penalties are assessed month-to-month. Employers need to understand their workforce and any associated non-employees. Be sure to prepare all information systems and have the data on hand that will be necessary to fill out IRS forms. In addition, it’s important to know how to respond to any questions employees may have about state exchange notices. Insurance News Net offered the following tips for ensuring compliance in 2015 and beyond:
- Put systems in place now to measure employee data: Employers need to establish specific measurement periods. Any employee who has been with a company for 90 days is entitled to benefits. You also need a stability period of ongoing benefits, and it may be best to match this time to your insurer’s policy.
- Review all position titles and employee classifications: Before an employee has entered a stability period, designations such as full-time, part-time, variable or seasonal are important. There may be new hires who do not fall clearly into one of these four categories, but there are other factors that employers can use to determine classification.
- Review all plan documentation: Group health plans have required government documentation, and employers need to review all plan information whenever regulations require companies to change how they offer their plans.
- Get ready for the future beyond 2015: Although many changes are happening this year, it’s important to be aware of what’s coming next so you can prepare in advance. Beyond the reporting requirements, there are other components of the ACA that haven’t gone into effect yet. There are the fully insured, non-discrimination rules and auto-enrollment requirements for employers with more than 200 employees, which haven’t been given an effective date yet. The Cadillac tax will go into effect in 2018.
The ACA is a highly complex piece of legislation that will continue to impact how businesses approach compliance for years to come. If you aren’t sure how prepared you are, take the ACA assessment here.