The Affordable Care Act (ACA) was enacted in 2010 with many delays coming between then and present day, including lawsuits and questions on implementation. The Supreme Court has made its ruling, and the employer and employee mandates are rolling forward in 2015.
As accountants and financial advisors, it is imperative to understand the ins and outs of this act in order to properly guide and direct employers and employees to make sound financial decisions. This Wolters Kluwer webinar, taught by Mark Luscombe, takes a look at the ACA in 2015 and outlines the important points for accounting practices as well as the necessary steps to become and stay compliant with the ACA for employers, accounting firms, and accountants.
In 1984, the case of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, created the Chevron Doctrine. This doctrine refers to a defense that is invoked by a government agency (in the case of the Affordable Care Act, being the IRS) allowing the court to show deference to the agency’s interpretation of a specific law it has the charge to administer.
The Chevron Doctrine comes into play here because of the King v. Burwel case. The Supreme Court decided and holds that individual tax credits are indeed available on state exchanges run by the federal government in addition to state-run exchanges.
This is a decision that is consistent with the IRS interpretation; however, the previously used and accepted Chevron Doctrine was ignored by the Supreme Court in this ruling creating a precedent that will impede changes attempted by any future administration or ruling.
Accounting Points to Ponder
Pay to Play=Employer Shared Responsibility Mandate
This outlines the fact that employers must follow the “any employee that qualifies for a premium tax credit or cost-sharing reduction” rule when determining if they must take part in the employer-shared responsibility mandate.
Who is a Full-time Employer?
The rules of determining if you are an employer of full-time employees are as follows:
- The hours counted are based on the previous calendar year;
- Full-time or full-time equivalency is based off a 30-hours per week or 130-hours per month for full-time status or the number of hours worked by part-time employers each month divided by 120; and
- Seasonal, volunteer, and student hours under government work programs are not counted.
Affordable Minimal Essential Coverage
The terms of affordable minimal essential coverage are as follows:
- Employees single cost for insurance does not exceed 9.5 household adjusted gross income determined through safe harbors;
- Plan covers 60% of essential health benefits; and
- Coverage to 70% of full-time employees for 2015 or 95% after that.
Employer ACA Reporting
According to the survey in the webinar, one of the most concerning facets of the ACA is the reporting requirements on employers or their financial representatives.
The employer reporting requirements include the following:
- Full-time employee healthcare coverage report, broken down by month, sent in each year;
- Form 1095-C distributed to employees by January 31; and
- Form 1094-C to IRS by February 28 or March 31 if done electronically.
These reporting requirements can become cumbersome if the employer’s workforce is unstable.
Health Insurer ACA Reporting
Health insurers also have reporting requirements within the ACA. Keep in mind that employers who choose to self-insure would also be subject to these reporting requirements.
The required reporting for these entities includes the following:
- Form 1094-B to IRS by February 28 or March 31 if done electronically
- Form 1095-B to covered individual by January 31
- Reporting is done to verify qualifying coverage on a month-to-month basis
- Individual exchanges report on Form 1095-A
- Insurers report on business obtained through SHOP plans
Additional Reporting Requirements to Consider
It is important to point out that there are additional reporting requirements for employers to consider beginning this year.
These reporting categories include:
- Mandatory electronic filing is required after 250 employees
- There are reporting guidelines for 3rd party facilitators
- Value of health insurance must be reported on each employees W-2
- Reimbursement plans are not allowed
As each employer begins to become familiar with the ACA requirements, it becomes apparent that an in-depth and user-friendly program is needed to stay on top of all the recording and reporting requirements associated with the ACA. eFileCabinet has the solution to fit your ACA compliance needs.
Our document management software (DMS) has the following capabilities:
- Ability to track and manage individual insurance documents
- Audit trail for each document
- Ability to set up specific workflow processes to ensure all employee or consumer IRS forms are received, recorded, and traceable
- State-of-the-art security measures to ensure compliance with all HIPAA rules and regulations
Fill out the form to receive a personalized evaluation and demonstration of eFileCabinet’s software and programs. Let us help you easily implement all ACA requirements.