Prepare your human resources department for new ACA filing requirements

Prepare your human resources department for new ACA filing requirements

On June 29,  President Barack Obama  signed the Trade Preferences Extension Act of 2015. While the law allows the president to push forward his plan for a 12-nation Trans-Pacific Partnership, Reuters reported, it also stiffens the penalties for insurers and employers providing too little healthcare for employees. Those  that do not meet the conditions of the Affordable Care Act's Minimum Essential Coverage and Large Employer filing requirements in 2016 will face compliance problems.

Changes for large employers and insurers
Health insurance reporting was not required in 2014, but now, employers are obligated to provide records of coverage to the Internal Revenue Service, according to consulting firm McGladrey. Filing requirements are dependent on the number of employees of a business, as well as the employer's specific health plan.

Many individuals use the coverage offered to them by their employer making those businesses liable for reporting the usage of benefits by its employees. Under IRS Code 6055, insurers or companies that support self-insured group health plans must file Form 1095-B and Form 1094-B, Health Coverage and Transmittal of Health Coverage Information Returns, respectively. Form 1094-B must be filed with Form 1095-B, which coveys information to the IRS regarding individuals who meet the requirements for MCE. 

Businesses that have more than 50 employees who collect full-time benefits are required to file a verification report using Form 1095-C and Form 1094-C. Under IRS Code 6056, this report will prove whether the company offered minimum, affordable coverage to its workers and their dependents during the previous calendar year.

IRS uses for forms
Under the ACA , individuals need a minimum amount of insurance to meet their individual responsibility requirement, according to HealthCare.gov. The IRS will use the mandatory documentation to determine if employees should split the shared responsibility penalty with employers for not having health coverage. Individuals without health insurance will be required to pay one-twelfth  of annual insurance cost for every month without coverage, according to the IRS.

Updated penalties
The new mandate comes with disciplinary measures to be taken if reporting is incorrect or late, Cigna reported. Changes include: 

  • a $250 fine for failure to file an IRS return or for not providing statements to all full-time employees,
  • an increased annual cap on penalty costs $1.5 million to $3 million in 2015, and
  • a $500 fee in the case of intentional disregard

These new penalties will be in effect for returns filed in 2016 for the 2015 calendar year.

Prepare your business
To avoid compliance issues and penalties for incorrect filing of ACA returns, there are a couple of things to know:

Remember that filing must be completed by Feb. 29, 2016, for the 2015 calendar year, according to EBN. Talk to to your benefits broker to make sure you have the ability to capture data through proper HR and benefits administration technology. Lastly, get your questions answered now. The quicker HR departments figure out tough aspects of the new reporting and IRS filing requirements, the better off they will be in terms of avoiding large penalties.

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