Setting the Clocks Back: Bracing for the Darkness
That is why TriNet created a series of articles on the ACA to walk you through what you need to know about the Affordable Care Act for small businesses and to keep you informed of any upcoming changes.
Here, we share the top seven things you should know about the Affordable Care Act for small businesses. We recommend bookmarking this page for easy future reference and, of course, contacting TriNet if you have additional questions.
Full-time Temporary Employees Should Be Offered Health Insurance
Unless the employee meets the strict ACA definition of a seasonal employee, full-time temporary employees should have an opportunity to elect coverage no later than the 91st day of employment. If not, companies with 50 or more full-time employees could pay a penalty.
There are Expensive Penalties for Not Offering Group Coverage
These new penalties mean that reimbursing employees for individual plan premiums could be more expensive than offering group coverage. The IRS has announced that reimbursing employees for individual plan premiums, including plans purchased through the marketplaces, is now prohibited. The penalty is $100 per day per employee, up to $36,500 annually.
Your Medical Plan Will Likely Become More Expensive
Ninety one percent of small businesses saw an increase in their most recent medical plan renewal. One of the reasons for this is that the ACA has added several required plan provisions that directly affect your pocketbook.
These include:
- Restricting lifetime and annual dollar limits.
- Standardizing which expenses count toward deductibles and out-of-pocket maximums.
- New fees and taxes for insurance companies, which are passed on to you in the form of higher premiums.
- Transitioning companies with 51-100 employees to the small group market.
Many ACA Communication Requirements Apply to All Companies Regardless of Size
Most companies are required to distribute a marketplace notice to all newly hired employees, even if they don’t offer medical insurance. If you offer coverage, as part of the Affordable Care Act for small businesses you must distribute or post a summary of benefits and coverage (SBC) for all eligible employees for each plan during the enrollment period. And if you have more than 250 employees, you are required to report the cost of coverage on the W-2 form.
You’ll Need to Figure Out if You Are an ALE
An ALE is an Applicable Large Employer, which means under the ACA’s Employer Shared Responsibility “pay or play” requirements, ALEs have to offer ACA compliant medical insurance to full-time employees or potentially pay a penalty.
TriNet can help you determine if your company is an ALE and which of your employees are considered full-time. Failing to perform the calculations and make accurate designations could mean your company has to pay ACA penalties.
ACA Section 6056 reporting requirements for 2015 apply to all companies with 50 or more full-time employees. If your company has less than 100 full-time employees, you most likely didn’t have to comply with the ACA “pay or play” provision in 2015. However, in early 2016, your company does need to provide 2015 coverage data to both employees and the IRS – which we recommend you start planning for now.
High Cost Health Plans Carry Additional Taxes
The “Cadillac tax” portion of the Affordable Care Act for small businesses may impact the cost of your company-sponsored medical plans. The Cadillac tax is an excise tax on “high cost” health plans that exceed statutory dollar limits ($10,200 for self-only and $27,500 for coverage other than self-only). But even if you offer a High Deductible Health Plan (HDHP) with lower premiums, your plans may trigger the excise tax because employer and employee pre-tax contributions to health savings accounts will also count towards the limits.
You Need Solid Professional Advice About How the Affordable Care Act for Small Businesses Affects You
You may have limited knowledge or understanding of how the Affordable Care Act for small businesses affects you. Failing to take the time to stay abreast of ACA requirements and rising healthcare costs could impact your company’s budget and growth, as well as your ability to attract and retain quality employees.
To avoid unexpected penalties for non-compliance, you should have a knowledgeable HR partner to help you guide your business through the Affordable Care Act for small businesses.
For more in-depth information about, visit the TriNet webpage on the Affordable Care Act.
This communication is for informational purposes only; is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
This post originally appeared on TriNet.
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