Affordable Care Act Update: Impact on Businesses

Since President Barack Obama signed into law the Patient Protection and Affordable Care Act (ACA) in March 2010, there has been continuous new guidance on how and when various aspects of the law will be implemented. For many, understanding how this impacts their business has become a daunting task. Specifically, there is uncertainty as to which implementation date is accurate and which date has been extended. In addition to the applicable deadlines, some are overwhelmed by the vast amount of information, rules and regulations that have been released.
 

Below are highlights of updated rules under the ACA that are important for businesses. We've also created this extended timeline of dates businesses should keep in mind going forward.

Transition Relief

Regulations issued February 10, 2014, provided a one-year transition relief delay for employers with 50 to 99 full-time equivalent employees (FTEs), for purposes of the pay or play penalty provisions (up to $3,000 per employee, per year). This deferral pushes the effective date of the penalty provisions for these employers to 2016. In order to qualify for this transition relief, these employers will need to certify that they didn't eliminate or reduce their employee health coverage that was in effect as of February 9, 2014, and that they didn't reduce their workforce or the hours of their employees, unless for bona fide business reasons, as of February 9, 2014. Employers with 100+ FTEs will be subject to the penalty provisions starting January 1, 2015, unless they qualify for transition relief for fiscal year plans.

Mandatory Information Filing

Final regulations on the information forms that will be submitted to the IRS and to individuals have also been released. The guidance explains that per IRC Sec. 6055, health insurance companies, employers or others that provide minimum essential coverage (MEC) to individuals will file Form 1095-B by January 31, 2016. January 31, 2016, is also the deadline for Form 1095-C, which provides full-time employees of an Applicable Large Employer (ALE) information about their insurance. Both of these forms, along with Form 1094-B and 1094-C, will be submitted to the IRS starting in 2016. These draft forms can be found at www.irs.gov.

Employer Payment Plans Penalty

The latest piece of guidance released was an IRS Frequently Asked Question (FAQ) about the potential penalty businesses could face for not complying with the rules set out in Notice 2013-54 concerning employer payment plans. In essence, employer payment plans are not allowed to be used to reimburse employees for health insurance premiums on individual policies on a pretax basis unless they meet certain qualifying circumstances. This applies to policies both in and outside the Federal Health Insurance Marketplace (i.e. "Exchange").

This clarification is centered on the fact that employer payment plans are group health plans that are subject to market reforms, which include the prohibition on placing an annual dollar limit on essential health benefits as well as the prohibition on out-of-pocket cost sharing for preventive health services for non-grandfathered plans. IRS Notice 2013-54 specifically states that these employer payment plans cannot be utilized with individual health insurance policies. If an employer uses employer payment plans in these instances, they may be penalized up to $100 per day, per applicable employee. However, employers are allowed to reimburse employees on an after-tax basis without penalty.

If you have questions or want more information about health care reform, please contact an Eide Bailly professional.