However much or little they have followed the events surrounding the ACA, employers must now assess their responsibilities under the current law. However, compliance alone
may not cover all of the potential cost savings under the ACA
– not without taking advantage of its opportunities.
Compliance for employers in 2016 revolves around two mandates: 1) employer shared responsibility provisions and 2)
information reporting requirements.
Employer shared responsibility essentially has two sides,
often referred to as “pay or play.” Companies that are large
enough to fall under ACA requirements, known as applicable
large employers (ALEs), must offer affordable minimum-value coverage to at least 95% of their employees who average 30 hours per week (or 130 hours monthly) and their
Failing this mandate, the ALE is responsible for employer
shared responsibility payments, which can be assessed at
time employees. If an employer does offer this coverage to
95% of its full-time employees, then it will still be subject to
a penalty of $3,000 annualized for each full-time employee
who receives a tax credit under the ACA; these penalties will
be adjusted for inflation in the future.
Compliance, therefore, would involve either extending mandated offers of coverage or preparing to pay the penalties.
Reporting requirements are introduced in IRC §6055 and
IRC §6056. While IRC §6055 pertains to ALEs that sponsor self-insured group health plans, IRC §6056 requires all
ALEs to report offers of coverage to both the IRS as well as
individual employees. Here, compliance refers to the timely
and accurate delivery of these reports, avoiding a series of
penalties that can currently cap at $3 million per calendar
year if uncorrected.
While much of the ACA is set in stone (at least for the
moment), employers control how they approach the law.