The following is an introduction to the Affordable Care Act (ACA) and the first installment in a multi-part series on employer responsibilities and obligations under the ACA.
The ACA includes a number of provisions that affect employer decisions to offer coverage to employees after beginning in 2014. Given that employer sponsored insurance (ESI) is the primary source of coverage for Americans, any change to this market is of significant interest to employers.
When do employers have to act to meet the requirements of the Affordable Care Act? The only thing required of employers at the start of 2014 was that they notify workers that the new health insurance exchanges have opened. Starting in 2015, large employers with 50 or more workers have a responsibility — but no mandate — to offer employees health coverage. If employers with 50 or more employees fail to make such notification, they may face fines, but only if their workers go to health insurance exchanges and have earnings low enough to qualify for federal subsidies. Stores, restaurants and other employers that have historically been less likely to offer health insurance in the past may be most affected. However, the coverage rule doesn’t affect workers who put in less than 30 hours a week.
The ACA imposes no responsibilities for employers with fewer than 50 workers. If such employers voluntarily elect to provide coverage for their employees, the insurance exchanges represent a new option for them in terms of where to shop. Certain employers with fewer than 25 workers are eligible for federal tax credits. To qualify, the company must cover at least half of the premium for all of its employees, and must also have average wages of less than $50,000.
On March 5, 2014, the U.S. Treasury Department (USDT) and the Internal Revenue Service (IRS) released final rules to implement the information reporting provisions for insurers and certain employers under the employer mandate provisions of the ACA. These provisions will become effective in 2015. Specifically, The USDT and the IRS issued two final rules that implement the information-reporting provisions for insurers and self-insured employers that take effect beginning in 2015 under the ACA. The rules, Information Reporting by Applicable Large Employers: Health Insurance Coverage Offered Under Employer-Sponsored Plans and Information Reporting of Minimum Essential Coverage, were published in the Federal Register on March 10, 2014.
The final regulations were developed to streamline reporting requirements for employers, particularly those that offer highly affordable coverage to their full-time employees. Specifically, the regulations instruct providers regarding minimum essential health coverage subject to the information-reporting requirements of Section 6055 of the Internal Revenue Code, enacted by the ACA, along with certain revisions to increase consistency with previous guidance issued under Section 6056.
The following are the final rules, issued by the USTD:
- Employers that self-insure will have a streamlined way to report under both the ACA’s employer and insurer reporting provisions, according to the USTD. Additionally, the final rules provide for a single, consolidated form that employers will use to report to the IRS and employees under both sections 6055 and 6056, thereby simplifying the process and avoiding duplicative reporting. The combined form will have two sections: the top half includes the information needed for section 6056 reporting, while the bottom half includes the information needed for section 6055.
- Employers that have fewer than 50 full-time employees are exempt from the ACA employer shared responsibility provisions and therefore from the employer reporting requirements.
- Employers that are large enough to be subject to the employer responsibility provisions and that “self-insure” will complete both parts of the combined form for information reporting.
- Employers that are subject to employer responsibility but do not “self-insure” will complete only the top section of the combined form (reporting for section 6056). Insurers and other providers of health coverage will report only under section 6055, using a separate form for that purpose. Insurers do not have to report on enrollees in the Health Insurance Marketplace, since the Marketplace will already be providing information on individuals’ coverage there.
Additional employer requirements will be addressed in the next installment.