Even though 2016 was considered the year of full implementation for the Affordable Care Act (ACA) employer mandate, changes keep coming. Here are a few points you will want to stay ahead of.
Small Employer Group Changes
The Protecting Affordable Coverage for Employers (PACE) Act, passed last fall, defines the small employer as having one to 50 employees. States, however, are permitted to elect to extend the definition of a small employer as up to 100 employees.
Even though the way businesses are categorized will now be a state-by-state decision, most are using the PACE Act definition. A few, including California and New York, have chosen to use 100.
Health Plan Transition Relief to Expire
Transition relief for the Employer Shared Responsibility payments for large employers with fully insured plans during the prior year will expire January 1, 2017. Depending on a plan’s eligibility and start date, applicable large employers (ALEs) must be compliant at some point this year or face penalties. Starting January 1, the non-calendar year transition relief expires and all ALEs will be required to offer compliant coverage. This does not apply to self-funded plans.
Grandfathered plans are also expiring in January 1, 2017. Fifteen states required the end of remaining grandfathered, non-ACA compliant plans this year, while the other 35 states will do so in 2017.
IRS Reporting Penalties
This year when employers completed Forms 1094-C and 1095-C, they were not assessed penalties for incorrect or missing data. Employers need to identify any issues with their reporting and plan ahead since that good faith effort has not been extended. They must set aside time for testing to correct any coding or processing errors. Employers should also consider avoiding the cost of printing and mailing by enabling employees to access Form 1095-Cs online.
Cadillac Tax Delayed to 2020
The 40% excise tax on the cost of health coverage exceeding pre-determined threshold amounts, which was initially intended to take hold in 2013, was delayed to 2018. Now it has been delayed to 2020 and while some think it will eventually become law because the revenue is needed to fund the Affordable Care Act, the IRS has again issued a request for comments.
Employers have several regulations to address and implement in order to remain compliant and avoid future penalties. As always, we are prepared to help our clients remain ACA compliant as regulatory changes continue to come our way.