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5 Things to Consider for ACA Reporting



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Tips about ACA Reporting Guidelines

The Affordable Care Act (ACA) is complex enough, and when you start getting into specifics like reporting guidelines, things can get ever more convoluted. Because of the ACA’s complexity, it’s always a good idea to seek professional help when dealing with anything Obamacare related. What follows below are five key aspects that can help make sense of the intricacy of the ACA. 

Pay or Play

Surprisingly, under current ACA regulations, an employer is not actually required to offer health insurance to their employees. However, if an employer does not offer ACA-qualified health insurance, as well as pay a certain portion of the premium costs, then they may be faced with penalties. This is dubbed the “Pay or Play” requirement, because an employer may choose to “play” by offering qualifying coverage and paying the sufficient portion of the premium costs, or “pay” the penalty for not participating. 

Starting Point

A starting point for an employer would be to determine if they are even required to “Pay or Play” based on the number of employees during the prior calendar year. This is determined by the number of full-time employees and full-time equivalents — all employees are counted. A full-time employee consistently works 30 or more hours per week and is counted as one person (including part-time, seasonal and temporary full-time employees). All other non-full-time employees are counted and their aggregated total is divided by 120 — this is the full-time equivalency total. The full-time and the full-time equivalent totals are added together, and if greater than 50, then the employer qualifies as an Applicable Larger Employer and must choose to “Play or Pay.” Please note, that in this equation, there are specific guidelines on how to treat temporary and seasonal employees.  

Controlled Group

A controlled group is when two or more employers share common ownership and are treated as one employer under certain provisions. A controlled group can exist when a group of companies are under common control or owned by the same five or fewer common owners. When a company is a member of a controlled group of companies, the total number of full-time employees of each company are aggregated to determine Applicable Large Employer status — the number of each company’s employees are aggregated  together, and if the combined sum exceeds 50, then all companies must follow the “Pay or Play” requirement. On its own, a company may have less than 50 full-time and full-time equivalent employees, though being part of a controlled group can change a small employer to an applicable large employer. If you need assistance with controlled group determinations, a CPA or retirement plan administrator can help. 

Healthcare Coverage

When it comes to health insurance, coverage must be of minimum value, and the employee-only level of coverage must be considered affordable to your lowest paid employee, which means that the monthly premium should not exceed 9.66% of monthly income. Most fully-insured group plans now provide minimum value. An employer’s broker can assist in developing an employer premium contribution strategy that will meet the affordability requirements. An employer who makes the effort to provide health coverage to employees will avoid additional penalty expense by meeting the minimum value and affordability threshold. 

Temporary & Seasonal Employees

Currently, many employers do not offer coverage to temporary or seasonal employees, however, the ACA regulations do not offer an exception for these employees. If an employer is an applicable large employer and temporary or seasonal employees are hired on full-time, then they are included in the “Play or Pay” scenario — they should be offered coverage or penalties may apply. You can avoid these inclusions by hiring them on as part-time and keeping their hours under 30 per week.

With these five tips in mind, understanding the ACA’s reporting guidelines can be a little easier, though it always remains advisable to consult a professional, just to ensure that you are 100% compliant. At LBMC Employment Partners, Terri Mangrum and Cindy Tresider are our ACA gurus. Should you ever need assistance, please don’t hesitate to reach out!