ACA Compliance

Large Group ACA Compliance

Large TN Employers | ACA Compliance

While having 50 employees may not make you feel like a large employer, unfortunately in the eyes of the Government you are. This of course opens you up too many new rules and regulations when it comes to providing, reporting and paying for health insurance.

If you would like detailed information in regards to the new rules and regulations, click here to receive a copy of our Large Group Health Reform Toolkit.

Pay or Play

The Affordable Care Act's "employer shared responsibility provision ” often referred to as the "employer mandate or "play or pay applies only to applicable large employers (ALEs). An ALE is a company that employed an average of 50 or more Full-Time Equivalent (FTE) employees in the prior calendar year.

Starting in 2015, a large employer in Tennessee may be assessed a penalty for failure to offer qualified health insurance to employees working 30 hours per week. Not providing minimum essential coverage to 95% of your eligible FTEs will result in a $2,000 penalty per employee (can exclude first 30). This coverage must also pass the affordability test, or there are other penalties and fines can result.

Employer Marketplace Notice

The Affordable Care Act (ACA) requires employers to notify workers about the availability of the new Health Insurance Marketplaces. The notice contains information that may be helpful to employees considering individual health insurance policy options available from the Marketplace. The notice is intended to:

  • Inform employees about the availability of the Health Insurance Marketplace;
  • Inform employees that they may be eligible for financial assistance (premium tax credit or cost-sharing reductions) if they purchase coverage through the Marketplace and if the employer's plan would not provide minimum value; and
  • Inform employees that, if they buy insurance through the Marketplace, they may lose their employer's contribution (if any) to their health benefits at work.

Employer Reporting (Forms 1095-C and 1094-C)

The reporting requirements are intended to help the IRS administer several provisions under the Affordable Care Act. Specifically, the IRS will use information reported by employers to determine:

  • Employees who are (or are not) eligible for subsidies if they purchase health insurance in the individual Health Insurance Exchange (Marketplace);
  • ALEs that fail to offer affordable minimum value coverage to full-time employees and whether the employer may be subject to potential penalties; and
  • Individuals who are enrolled in minimum essential coverage that satisfies the ACA's individual mandate.

The Affordable Care Act (ACA) added two employer reporting requirements to the Internal Revenue Code (Code) taking effect for 2015:

  • Code § 6056 requires applicable large employers (ALEs) to provide an annual statement to each full-time employee detailing the employer's health coverage offer.
  • Code § 6055 requires employers that provide minimum essential coverage under a self-funded (self-insured) plan to provide an annual statement to covered persons.

The IRS has designed a new form, Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for ALEs to satisfy the requirement under Code § 6056. If the ALE self-funds its plan(s), the employer also will use Form 1095-C to satisfy the additional requirement under Code § 6055.

TN employers providing Forms 1095-C to employees and responsible individuals also must file copies with the IRS using a transmittal form, Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. In addition, the transmittal form requests aggregated information.

Note: Small employers (under 50 full-time-equivalent employees) that sponsor self-funded health plans are subject to reporting requirements not discussed here.

W-2 Reporting “ Health Coverage Cost

The Affordable Care Act requires all employers to report the aggregate cost of applicable employer-sponsored health care coverage on the employee's Form W-2 (starting with tax year 2012). The amount is informational only and has no tax consequences. Penalties may be imposed on employers that fail to comply with this reporting requirement.

  • Employers must report the aggregate cost of applicable employer-sponsored health care coverage on the employee's Form W-2.
  • The cost amount is reported in Box 12 using code DD. This item is informational only and has no tax consequences.
  • This item does not change or replace any other W-2 processes or requirements. Penalties may be imposed on employers that fail to report the health care coverage cost on Form W-2.
  • Exceptions: The following employers are exempt from this W-2 reporting requirement:
    • Small employers: Employers that filed fewer than 250 employee Form W-2 for the prior tax year.
    • Multi-employer plans: Employers that contribute to a multi-employer plan.

Health Insurance Affordability

TN employers must provide coverage that is deemed affordable to employees or they can be subject to fines. Coverage is considered affordable if the employees' required premium contribution for self-only coverage to the lowest cost plan that offers MEC does not exceed 9.5 percent of the employee's modified adjusted gross household income. Employers may not be able to determine an employee's gross household income. However, they may use one of three methods (affordability safe harbors) to help them determine if the coverage they are providing employees is affordable:

  • Form W-2 Safe Harbor: Use employee's Form W-2 wages shown in Box 1.
  • Rate of Pay Safe Harbor: Multiply an employee's hourly rate by 130 to determine monthly wages, or use a salaried employee's monthly pay.
  • Federal Poverty Line Safe Harbor: Use the federal poverty line for a single individual.

Calculating Full-Time Equivalent Employees

Another ACA compliance concern for growing businesses is to not become an Applicable Large Employer (ALE), where the Employer Shared Responsibility provision would come into play. Under the new ACA requirements, a full-time employee is anyone working 30 hours per week.

In Tennessee the difference between a large and small employer is 50 Full-Time Equivalent Employees (FTE). This can be a complicated calculation if you have part time or seasonal employees as their hours count toward your FTE calculation.

The Patient Protection and Affordable Care Act (PPACA) is complex”and it has profound impacts on your business. Together we can develop a plan that will prepare you for federal agency audits and help steer clear of fines and taxes.

Call today for more information 615-724-1701 or email