As 2016 quickly approaches, companies and their human resources teams are preparing to report their employee health coverage under The Affordable Care Act. The legislation aims to make sure all employees are granted the appropriate health insurance by their employer moving forward. Employers must ensure they are meeting all ACA requirements.
The forms: 1095 and 1094
Mid-sized and large employers – with more than 50 employees who work 30+ hours per week – must fill out forms 1095-C and 1094-C to show they're providing health insurance according to the ACA's requirements. Small businesses – those with less than 50 workers – must complete forms 1095-B and 1094-B.
The penalties are costly
The ACA has strict penalties for employers who do not complete these forms on time or fill the documents out incorrectly. Companies are also required to forms for workers to personally finish. Failure to do so could also result in costly fines.
A business faces fees of up to $1.5 million per year for unfiled documents or not sending employees the appropriate forms. While there are penalties for failing to file these records on time, the IRS does give August 1 as an additional deadline for employers to send in their forms. If companies don't file by the original due date, but are able to send them in by the secondary date and have paid federal and states taxes already, the fees may be reduced.
Reduction of fines and fees
To avoid ACA penalties, large employers must make sure to provide affordable coverage. This means the plan must cost less than 9.5 percent of the wages reported on a worker's W-2 form, cost less than the employee's rate of pay and be less expensive than the federal poverty level for that year.
There are three health program options companies can offer which will help them reduce or eliminate their penalty costs. The first is a Minimum Essential Coverage plan, which is the most basic coverage these employers can give to workers. This choice gets rid of a possible $2,000 fine businesses would encounter if they decided not to provide health insurance.
The Minimum Value Plan is the next alternative. The option requires employees to pay at least 60 percent of the total cost of medical services. This program or any selection of greater value eliminates the $2,000 pay-to-play fee.
The last option is a combination of the MEC and MVP program. By offering this type of coverage, employers can avoid both the $2,000 and $3,000 penalties which result from refusing to provide appropriate health insurance.
Triton Benefits offers companies broker experience and HR technology necessary for timely and accurate completion of ACA forms and overall compliance.