OK, so you sponsor an insured group health plan and employ at least 50 full-time employees including full-time equivalents, or “FTEs” (that’s ACA jargon for 30 hours of work each week performed by more than one employee so that, for example, two employees working 15 hours per week equals one “FTE”).
You have made this determination based on your average employee count during 2014 (if you’re still working on this calculation, bear in mind that you can use any consecutive six-month period during 2014, but that’s for 2014 only). So, you’ve nailed down that number – what is the next step?
You’ll need to file data with the IRS showing participation (or non-participation) of your employees in your insured group health plan on a month-by-month basis during 2015 – and notify your employees of their information. This reporting is required even if you do not provide any group health coverage for your employees. Self-insured plans, even those covering fewer than 50 full-time employees plus FTEs, have a separate filing requirement.
Take a look at IRS Form 1094-C for an idea of what is required and remember that the information returns must be provided to employees by February 1, 2016 (the IRS filing for hard copy filers is due February 29, 2016).
Some of the required information may be compiled by your payroll service. But your payroll service probably will not track the following:
- The date when coverage (as opposed to premium payments) begins and ends
- Evidence of your offer of group health coverage to eligible employees
- Any employee waivers of coverage
- The out-of-pocket employee cost of the lowest cost employee-only coverage
Can your plan play catch up and handle all this later on? Maybe – but it’s going to be your responsibility to come up with required historic data and undertake a “good faith” effort to comply in order to avoid IRS fines for submitting incomplete or inaccurate data.
Is there any good news? Well, if you have fewer than 100 full-time employees (including FTEs), you may be exempt from the penalties for failing to provide ACA-compliant coverage for 2015 (there are a few other conditions that apply). Those are the $2,000-$3,000 annual per employee non-deductible penalties – and they definitely will apply after 2015.
Today’s Takeaway: Don’t procrastinate in understanding and meeting your compliance requirements.
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.