ACA Compliance: Employer Questions that Matter

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The Affordable Care Act (ACA) prompts employers to ask themselves and their employees many questions. Questions that matter if you want to avoid potential fines and penalties. As an employer, do you have 50 or more full-time equivalent employees? That matters because if you do, you must offer full-time employees health care coverage or pay a penalty. Failure to offer coverage to full-time employees (and as defined under the ACA) can mean penalties of $2,000 to $3,000 per employee. And in 2016, transition relief is ends.

As an employer with 50 or more employees, do you offer “affordable” health care coverage that provides “minimum value” to your full-time employees as defined by the ACA? This question matters because it’s an important requirement of compliance to the ACA. Affordable means that an employee’s premium contribution for self-only coverage for the lowest cost plan does not exceed 9.66% of the employee’s household income in 2016 (safe harbors can be applied). Minimum value means that a plan would pay for at least 60% of medical expenses on average for a standard population.

Do you offer wellness programs or other employer heath incentives to your employees? This question matters because if you do, it could impact the calculation of the amount of each employee’s share of the lowest-cost, self-only coverage. Things like employer contributions to an HRA (health reimbursement arrangement) and employer flex credits under a cafeteria plan are examples.

There are many more important questions employers need to ask of themselves in regards to the ACA. A good checklist from a reputable service provider would be a good place to start.

By Dale F. Jensen, CPA