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Preparing for 2016: Affordable Care Act Compliance

Is your organization ready for the next round of Affordable Care Act changes for 2016? Next year means more regulations will roll out and smaller businesses will be affected.

This year marked the government mandate requiring businesses with 100 or more full-time employees to begin offering health care coverage to all its staff members. The start of 2016 means smaller employers must report their staff members’ coverage by filing forms 1095-C and 1094-C to the IRS no later than February 28, 2016, or by March 31, 2015, if filing electronically, the IRS stated. Businesses should mail out a 1095-C form to their employees no later than Feb. 1, 2016, according to The Society for Human Resource Management.

Failure to file can amount to a fine of up to $3 million for some companies depending on how many employees they have.

What to include
The filing must include the name of the company along with the name of the employee receiving the medical coverage and how long they will be covered under it, the IRS reported.

According to Friedman LLP, an accounting and advising firm, the companies the IRS expects to file are known as applicable large employers or ALEs, meaning a business had 50 full-time employees or more in 2014.

According to the International Foundation of Employee Benefits Plans, human resources and finance departments need to begin their work now to examine how the law will affect the bottom line.

“Employers need to devote significant time and energy to maintain compliance with the law,” Julie Stich, director of research at the foundation, said in a news release. “The extensive amounts of data that employers are required to collect can take hours of man power and even require complex [information technology] infrastructures. The process has meant a cost increase for many, especially smaller organizations.”

The Affordable Care Act will add on more expenses for companies.Businesses anticipate 2016 will be an expensive year for them.

Expensive projections
In fact, employers are expecting 2016 to be the costliest year under the ACA with 33 percent of respondents to an IFEBP survey claiming next year’s compliance requirements will drive up how much money companies spend to offer health care mandated by the government.

According to SHRM citing the survey, many businesses project 2016 as an expensive year with 20 percent of company heads pointing to the excise tax on plans with generous benefits. Meanwhile, 19 percent of employers said the administrative costs that come with handling the extra work the ACA requires will drive up their costs, and 13 percent think reporting their compliance will add on to their expenses.

Keeping costs down and preparing for subsidies
There are ways that a company’s human resources and finance department can work together if they study where costs may be cut. While the majority of employers polled by IFEBP and cited by SHRM said they wouldn’t cancel their health care offerings since it attracts strong job candidates, some are hoping to transition employees to cheaper plans.

Forty-two percent of respondents said plans with lower premiums and higher deductibles that offer a health savings account would be a cost-effective alternative sparing companies from having to pay the excise tax associated with health coverage that boasts better benefits.

Besides filing paperwork with the IRS, employers should also be on the lookout for possible mistaken or fraudulent ACA claims, according to SHRM. Companies have 90 days to appeal any ACA claims.

It will pay for businesses to watch for certification notices from the IRS.

“Uninsured part-time employees, contractors and temps might have received subsidies, claiming to be full-time employees,” R. Pepper Crutcher Jr., an attorney with an ACA legal practice, told SHRM. “Employers won’t know until they finally see the certification notices.”

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