Ir’s not exactly hats and horns for the 2016 Affordable Care Act (ACA) New Year, but there are a few reasons to celebrate regarding compliance matters.
Filing Extensions
The 2016 ACA reporting deadlines that apply to all subject employers (those with an average workforce of 50 or more full-time employees plus full-time equivalents, or “FTEs”) have recently been extended. The new due dates are:
- For employee reporting (2015 IRS Forms 1095-B and 1095-C), the deadline is postponed from February 1, 2016 to March 31, 2016;
- For IRS filings (2015 Forms 1094-B, 1094-C, 1095-B and 1095-C), the deadlines are postponed from February 29, 2016 to May 31, 2016 (paper filers) and from March 31, 2016 to June 30, 2016 (electronic filers).
In addition, Congress acted in mid-December to postpone from 2018 to 2020 the “Cadillac Tax” on high-cost employer health plans that is likely to impact one in four sponsoring employers. It also made this excise tax deductible for subject employers. The postponement comes with Congressional direction to study adjustments to the excise tax threshold that triggers the tax which could afford tax relief to some employers.
Helpful Housekeeping Details
There are also a few helpful housekeeping details buried in the ACA 2015 regulatory barrage:
First, the coverage affordability threshold of 9.5 percent of “household income” has been adjusted for the cost of living, so that percentage increases to 9.56 percent for 2015 and 9.66 percent for 2016.
Second, the annual penalty amounts ($2,000.00 and $3,000.00 per employee for employer “shared responsibility” payments) have been similarly adjusted to $2,080.00 and $3,120.00 for 2015, and $2,160.00 and $3,240.00 for 2016. The regulators have now established penalty amounts that (except for $2,080.00) are divisible by 12! This will, at long last, facilitate their computation on a monthly basis as required by the ACA.
Third, payments to employees on account of non-working time (such as vacation, paid holidays, sickness, lay off, jury duty, military duty and leaves of absence) normally count in measuring “hours of service” to determine full-time employee status and to compute the number of FTEs. Recent clarification provides that workers compensation and employer-funded disability payments to former employees can be excluded from hours of service for this purpose. Fewer hours of service means fewer FTEs, which could be good news for some employers.
Recommendations
- The extension of reporting deadlines is good news especially for Applicable Large Employers (ALEs) with fewer than 100 full-time employees plus FTEs. Remember to use 2014 employee information for this purpose, and for 2014 only, employers can select any period of six consecutive months to determine this average number of full-time employees and FTEs.
- But get started on compiling the necessary historical information because payroll services will not be able to provide all of the data required to complete IRS Forms 1094-C and 1095-C (1094-B and 1095-B for self-insured plans).
About the Author
Andrew S. Williams has practiced in the employee benefits and ERISA arena since ERISA was passed in 1974. He has been recognized by his peers through a survey conducted by Leading Lawyers Network as among the top 5 percent of Illinois lawyers in Small, Closely and Privately Held Business Law and Employee Benefit Law. He maintains a website, Benefits Law Group of Chicago, with additional updates, commentary and analysis on benefits and employment topics.
Disclaimer: The above material is intended for general information purposes and should not be relied on or construed as professional advice. Under the applicable Illinois Rules of Professional Conduct, the contents of this e-mail may be considered to be attorney advertising. The transmission of this information is not intended to create, and receipt of it does not create a lawyer-client relationship.
