Most companies are still adjusting to the Affordable Care Act (ACA). As the law continues to be phased in, human resources departments will likely encounter even more challenges.

Familiarize Yourself with New ACA Regulations

Compliance with ACA regulations is mandatory

This might seem like a no-brainer but, as the Society for Human Resources Management(SHRM) points out, “As long as the law is the law, it’s the law…some might wish that the courts, Congress or a future administration will alter or rescind the statute. But…until that happens, employers should take all necessary steps to maintain compliance with the ACA’s coverage and reporting requirements—and not delay doing so in the hopes of a last-minute penalty reprieve.”

If you weren’t a supporter of the Affordable Care Act, and hoped it would be revoked or voted back out of service, you are not alone. The fact remains, however, that congress has continued to uphold the ACA and that means U.S. employers must comply. The U.S. Supreme Court’s June 25th ruling (King v. Burwell) signifies the ACA is here to stay. The longer you drag your heels complying with it, the heavier the penalties will be for your company.

File those information returns

Back in June, the Trade Preferences Extension Act included an piece of legislation that hardly relates to extending trade preferences. This “additional” caveat specified that employers who do not comply by filing ACA information returns can face steep penalties, doubled per-employee for those who qualify as large employers.

For this reason, and to remain within good legal standing with the U.S. government, your company must comply by filing annual information returns with the Internal Revenue Service (the “IRS”).

  • Large employers. If your company employs 50 or more full or full-time equivalent employees during the 2015 tax year, you will file Forms 1094-C and 1095-C. Which portions of these forms you need to fill out depends on varying criteria, including whether or not employees work full time or whether your company offers a fully insured health plan, a self-funded health plan, or both.
  • Small employers. While smaller employers are still exempt from the “play or pay” penalties their larger counterparts are subject too, you may still have to meet certain reporting criteria. An HR specialist and/or a certified tax professional will help you determine whether or not this is true for your company. If you do have to file reports, you will use Forms 1094-B and 1095-B to provide information about employees enrolled in self-insured plans.

While it’s true these requirements commence at the beginning of 2016 (for the 2015 tax year), it’s imperative that your HR and/or bookkeeping staff are well-versed on the ins-and-outs of these regulations and are familiar with the relevant forms to prevent any errors and omissions that will lead to stiff penalties.

New Regulations Mean Rising Costs Are Predicted for 2016 and Beyond

Of course, with added and stricter regulations comes heavier costs and penalties for employers, especially those who fail to comply.

Doubled penalties

As hinted at above, employers who fail to file their information returns will be subject to double penalties.

  • Failure to file an employee information return or payee statement will now come with a $250 penalty (per employee), more than double the current $100 hit.
  • Total employer penalty caps will jump from $1.5 million to $3 million.
  • If you fail to file both information returns and payee statements, the penalty cap will extend even further to $500 per statement and a $6 million dollar cap.

Excise Taxes

Many employers fear one of the biggest increase in costs related to the Affordable Care Act will come in the form of pending excise taxes for high-value health plans. The non-deductible 40% tax will be paid on health plans with a total cost that exceeds the statutory thresholds for 2018. These taxes are paid whether or not the premiums are paid by the employees or the employers.

Reporting, Disclosure and Compliance Costs

Then, there are the additional costs associated with reporting, disclosure and compliance. This takes a tremendous amount of time, energy and labor on behalf of employers and their HR departments.

There is always a learning curve with any new piece of employer-related legislation and the Affordable Care Act is one of the largest curve balls U.S. employers have had to take a swing at yet. If your company is struggling to keep on top of ACA compliance and you fear the rising costs will negatively affect your bottom line, contact UniqueHR and learn how a PEO can help.