Insurance Is Boring


ACA employer mandate in 2015

2015 will be the first year of enforcement for the employer shared responsibility rule provisions under the Affordable Care Act. For employers with 100 or more fulltime equivalent employees, the provisions apply in 2015 and beginning in 2016 the provisions apply to employers with 50 or more fulltime equivalent employees.

Though numerous guidelines were put forth in 2014 to inform employers of how to satisfy the requirements under the employer mandate, many of the new guidelines eliminated some of the ways in which employers thought they would meet their ACA obligations.

Cutting corners

Faced with the requirement to provide medical coverage to an expanded population of employees, some employers sought strategies that required the least amount of commitment while still meeting the demands of the law. "Skinny" or "minimum value" plans were just such a strategy, as these plans provided the absolute minimum amount of coverage to employees. The IRS and the Department of Labor, however, swiftly came down on these plans and stated that these plans do not meet the minimum standards contemplated by the ACA and therefore fail to satisfy the employer mandate.

Similarly, employers considered individual health insurance reimbursement arrangements as a way to provide funding for employees' health expenses while avoiding the obligation to put in place a group plan. On several occasions, however, the government made clear that stand-alone reimbursement arrangements fail to comply with the ACA, regardless of whether done on a pre- or post-tax basis. Simply put, the IRS and DOL made clear in 2014 that cutting corners won't "make the cut" at all.

Delaying the inevitable

Despite the overwhelming number of rules that employers are facing, there are more on the horizon. Enforcement of certain provisions under the ACA has been delayed, and while this allows employers more time to prepare, employers should not postpone the creation of a competent strategy. For example, the ACA extends nondiscrimination rules to fully-insured plans. The federal government has stated that these nondiscrimination rules will not be enforced until more information thorough guidelines is provided, but employers would be wise to keep these rules in mind when designing health plans and avoid the need for a total re-design in the future.

In addition, Section 6055 and 6056 reporting to the IRS is not required until 2016. This requirement is over a year away, but employers need to be diligent in their preparations to efficiently and effectively meet this obligation. Putting in place a reliable payroll / HR reporting system now will avoid an unnecessary scramble later. Employers with part-time, seasonal and/or variable hour employees will need their HR reporting system to also establish benefit eligibility reporting for 2016 to determine who is eligible for benefits in the future.

Denying the current Reality

The most detrimental strategy for compliance is for employers to deny the need to comply altogether. By now, it is clear that the employer mandate will be in effect in a matter of days. Employers should not hold out for significant changes to, or even a complete repeal of, the current law. A now-Republican majority in Congress brings with it much grandstanding and political rhetoric concerning a repeal of the ACA, but such discussion should be taken with a grain of salt. Any overhaul to the existing law won't be seen for some time - if at all. And though the U.S. Supreme Court will soon be hearing arguments regarding the role of federally-established marketplace exchanges, the Court's decision is not only many months away, but is unlikely to result in the unraveling of the employer mandate.

All employers with 50 or more fulltime equivalent employees, who will be subject to the shared responsibility provisions, should be preparing for administration compliance beginning in 2015.

Please contact us if you have questions or need assistance.

Thank you,
George Knox, CLU, ChFC