With its purpose to provide health care for all individuals, the Affordable Care Act is an interesting blend of health insurance benefits, payroll considerations, and tax implications – the perfect storm for businesses. Companies can turn to professional service advisors to help weather this storm, including payroll service providers, health insurance brokers, and their tax professionals.
To complicate matters, many construction companies process their payroll internally to maintain control over job costing and other reporting needs. This means the information required for ACA reporting will have to be generated from their internal payroll system. As we look ahead toward ACA reporting requirements for 2015, what needs to be addressed now?
- The first step is to become familiar with the terminology and requirements for 2015. Most of the new provisions effective for 2015 apply to applicable large employers (“ALE’s”) which is defined as employers with 50 or more full-time or full-time equivalent employees in a month. Additional considerations must be addressed, such as what qualifies as full-time, what period you use to determine the number of full-time employees, and what about controlled group companies. Controlled groups exist when companies have common owners, provide services for each other or jointly provide services for third parties. These are all special considerations that should be examined if your company is close to the 50 employee mark. Now is the time to examine the hours reports from the payroll module in your accounting software and contact your software provider if you have questions regarding the payroll reporting.
- For 2015, ALEs are subject to Employer Shared Responsibility provisions. These provisions require employers to offer affordable health coverage that provides a minimum level of coverage to their full-time employees and their dependents. As those of us that live in Silicon Valley know, affordable is a loose term. Most employers don’t know their employees’ household incomes, so there are three safe-harbor calculations to determine if the health insurance offered by the employer would be considered affordable. The minimum level of coverage information can be obtained from the health benefit provider or broker in the form of an annual affidavit that confirms that the coverage provided meets the minimum essential coverage standard. Talk to your health benefit provider or third party administrator now to make sure they will provide the affidavit.
- The final item to discuss for 2015 is the annual reporting requirements for ALEs. ALEs must report to the IRS whether they offer their full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan. A Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, must be completed for each employee and provided to the IRS and the employee. A Form 1094-C is the transmittal report which accompanies and summarizes the Forms 1095-C. These forms must be furnished to employees by January 31, 2016 and to the IRS by February 29, 2016 (same as W-2s). In August 2015, simplifications were made to these forms which are good news for construction companies who have employees eligible for coverage through a multi-employer plan (union plan). More changes for reporting of coverage through multi-employer plans are expected for 2016.