Late 2015 saw so much legislative and regulatory change to the Affordable Care Act (ACA) that it was difficult to keep up with it all. Heading into 2016, it’s important for employers to understand what has already happened, what the ACA means today and to watch how it evolves in the coming year.
Several sections of the ACA have been repealed since the first version, giving employers some time and space to regroup and game plan a little more.
- Free-choice vouchers (repealed in 2011)
- Form 1099 reporting for ACA (2011)
- $2,000-deductible ceiling (2014)
- Automatic enrollment mandate (2015)
- Mandatory expansion of small group to 100 employees (2015)
The repeal of these provisions that were seen as overly burdensome on business and employers is a relief to many businesses, but the Congressional Budget Office (CBO) sees it differently. According to the CBO, it will mean hundreds of thousands of workers will go without the safety net of insurance.
A couple key aspects of the ACA were delayed, but not repealed.
Although sections 125 and 105(h) nondiscrimination rules are intact, the nondiscrimination rules prohibiting discrimination in favor of highly compensated individuals that were supposed to be applied to fully-insured group health plans were delayed indefinitely. That means that for now, employers may still be able to offer better plans to highly compensated individuals in some cases.
The controversial Cadillac tax that was set to take effect in 2018 has been delayed until 2020. It was a 40% excise tax on employer-sponsored health plans with really “rich” benefits. Industry insiders predict that it’s highly likely the Cadillac tax will be repealed altogether before 2020, but that remains to be seen. Employers that have implemented a mitigation strategy may have to switch gears if the Cadillac tax gets permanently axed.
Employers have plenty of ACA issues to deal with in 2016, including the following:
- Determining Applicable Large Employer (ALE) status is an issue that employers have to look at annually. This is determined by accounting for total number of full-time and full-time equivalent employees averaged for the previous calendar year. Totaling at or more than 50 generally means you are an ALE and must comply with the Employer Shared Responsibility requirements, but this rule and the accounting that go along with it can be confusing and requires close attention.
- Employer Shared Responsibility is a complicated aspect of ACA compliance that requires ALE’s to offer minimum essential coverage that’s both affordable and provides minimum value to full-time employees and dependents or pay a penalty. It’s not as burdensome on employers with a stable workforce but becomes much more complicated for those with seasonal and variable-hour employees.
- ACA reporting continues to be a sticking point as a burdensome aspect. Form 1095/1094 reporting requirements mean employers have an additional payroll and accounting step to take to report to the IRS and to provide documentation to employees to use with their tax filings.
- Market reform rules, including elimination of pre-existing condition limitations, the expansion of coverage until age 26 under parental insurance, the out-of-pocket limit ceiling, and 100 percent coverage for preventive services, have been implemented. But grandfathered plans are exempt from some of these reforms, so even though employers rely on insurers and third party administrators to coordinate these in their plans, they should pay attention to them for compliance.
- Employers have to make sure that their group health administrative practices are correctly documented in policies, handbooks, plan documents, insurance contracts, and Section 125 plans. ACA-related documentation should be regularly reviewed and monitored.
What This Means to You
The ongoing evolution of the ACA means employers have to focus closer attention on their plans than ever before. Understanding their workforce numbers, staying on top of all the moving parts of the ACA, and close coordination between internal facilitators, insurers and third party administrators is essential.
How PAYDAY Can Help
PAYDAY staff and HR partners are expertly prepared to provide ACA support, education, and information to help you understand and manage ACA reporting and compliance issues. You can rely on us to keep you on track with status updates and changes to ACA as they apply to your business, and we can assist you with fulfilling reporting requirements.