Size Matters for ACA Employer Mandates for Compliance

Posted by Donna L. McClintock, CPA

1070601182_0fe532a667_qFor a while we have heard talk about ACA mandates.  The individual mandates went into effect in 2014 and after being delayed the employer mandates begin in 2015.  Generally the 2015 employer mandates apply to employers of 50 or more full time equivalent (FTE) employees.  However, employers with 50 to 99 FTEs get another year of reprieve.  Therefore, employers with 100+ FTEs must comply with ACA mandates beginning 2015.  As you can see, size really does matter when it comes to ACA!

Before employers with fewer than 100 FTEs breathe a sigh of relief, those with 50 to 99 FTEs should note that in one area there is no reprieve for 2015.  That is for compliance reporting—Forms 1094 and 1095.  These forms (1094 and 1095) have similar traits to 1099s or W-2s. For example, they have the same due dates, the 1094 is the transmittal or summary form (like a 1096 or W-3) and the 1095 is the form that is given to the employee after completion by the employer or insurance provider.

There are three different types of 1094/1095s.  In most cases, employers of 50+ FTE only need to complete forms 1094C and 1095C.  There are situations where an employer needs to complete 1094 and 1095Bs but I will elaborate more on those in a future blog.

A fully insured employer (vs a self-insured employer) needs to be concerned with part I and part II on form 1095.  Part I is information regarding the employee and employer. This information includes basic details such as name and address. Part II includes information the IRS will use to determine if penalties need to be assessed under the pay or play rules.  This part can be very confusing and time consuming to complete.  Information needed to complete this area is:

  • Line 14 – Was coverage offered? (Nine possible responses) What months offered?  All 12?
  • Line 15 – Amount of Employee Share of Lowest Cost Monthly Premium for Self-Only Minimum Value coverage? In which month?  All 12?
  • Line 16 – Applicable Safe Harbor under Section 4980H; (Nine possible responses) What months?  All 12?

Part III is only to be completed by employers with self-insured coverage.

Employers have implemented various methods to make sure they meet the reporting requirements, such as contracting their payroll, benefits provider, or accounting firm. Some utilize their in-house HR/General Ledger/Payroll software if it has the capabilities to prepare the forms.  The key is that now is the time to make sure you are able to meet the reporting requirements and remember Size Does Matter.

Photo by Simon Adraiensen (License)

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