Affordable Care Act 2015 Compliance Review & Associated Costs

It is hard to believe the Affordable Care Act was enacted over four years ago. Many significant changes took effect in 2014 such as health plan design changes and increased wellness program incentives.

Now that 2015 has arrived, additional reforms will be seen by employers sponsoring group health plans. The most significant reform impacting employers is the shared responsibility penalty known as “Play or Pay” rule and related reporting requirements for applicable larger employers.

Employers should start preparing their strategy for addressing these compliance changes, including ensuring the 2014 reforms are being kept updated.

Beginning January 1, 2015, employers with at least 100 full-time equivalent employees must offer affordable health coverage. The employer responsibility provisions will not apply until 2016 to employers with between 50 – 100 full-time equivalent employees.

"Pay or Play" - Employer Costs Associated with ACA

In order to avoid compliance penalties employers subject to the “Play or Pay” mandate must offer “minimum essential coverage” to full-time employees and their dependents that is both “affordable” and provides “minimum value.” What this means is if an employer does not offer coverage to fewer than 70% of its employees and at least one full-time employee qualifies for a premium tax credit to help pay for exchange-based coverage, the liability would cost the employer $2,000 times the number of full-time employees minus up to 80 employees for 2015.

However, if the employer does offer coverage to at least 70% of its full-time employees but for some employees the coverage turns out to be unaffordable or fails to provide “minimum value.” In this scenario, the employer incurs a liability of $3,000 for each full-time employee that qualifies for a premium tax credit to help pay for exchange-based coverage.

The Affordable Care Act’s definition of “affordable” health coverage is the employee’s share of the premium for the employer’s lowest cost, self-only coverage option should not be more than 9.5% of the employee’s Box 1 W-2 wages, as long as the employer elects the W-2 affordability “safe-harbor” option.

Under this new compliance requirement, large employers will be required to file information returns annually with the IRS, as well as furnish statements to full-time employees about the health coverage the employer offers.

Employers should make a point of evaluating their current plans and determine the number of full-time equivalent employees they have employed to determine their reporting requirements. Helios is hosting a private, invitation-only luncheon to address ACA concerns later this month on February 27th. For more information, contact us at 703-860-3882 x102 or info@helioshr.com.