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Employers Not Ready to Meet ACA Requirements

The Affordable Care Act (ACA), commonly known as Obamacare, has brought a certain amount of confusion and complexity to employees and the businesses who employ them. The Affordable Care Act requires employers to fulfill ACA requirements depending upon the number of employees they have. Typically, a company with 50 or more full-time employees is considered a large employer for the purposes of the ACA.

tax credit for health care

Large employers are required to offer health coverage to their full-time employees. They are required to pay the Employer Shared Responsibility if any of their full-time employees receives a premium tax credit when they purchase coverage from the Marketplace. A full-time employee is one that works at least 30 hours per week. Employee Benefit Advisor shares how the ACA provisions are impacting employers and how prepared they are to fulfill the requirements:

“In a recent Ernst & Young webcast poll, 25% of employers said they were not ready to meet all the implementation requirements of the ACA. Of the 56% who reported that they were partially ready, they said they still have work to do.

“Tax and finance departments, who historically relied on HR to handle compliance requirements, are facing the most pressure, says Juliette Meunier, partner in the Ernst & Young Human Capital Group in Los Angeles.

“Finance managers have a lot on their plate and were forced to deal with the most pressing and highest priority items first, Meunier says. ‘Due to all the various [ACA] delays and talk of repeal, many organizations wanted to make sure it was here to stay and waited [to] start working on it,’ she explains.

“Further, the Internal Revenue Service had not issued much guidance about required compliance until about a year ago and final regulations for reporting did not come out until March 2014, making it ‘difficult for finance/tax departments to comply,’ Meunier says.

“The fact that employers are not ready is not surprising, says Steve Wojcik, vice president of public policy at the National Business Group on Health. ‘Employers are feeling bewildered partially because forms and instructions for employer reporting just came out and require coordination across different functions and systems,’ he says.

“’It’s important for companies to [understand] employer penalties, and important for employees with respect to their own liabilities,’ he adds. ‘It’s easy to imagine that some employers or somebody within a company is feeing this is a lot of work for them – because it is.’

“Wojcik says many companies were not taking a wait-and-see approach but were already acting and trying to gather the information they could. Despite that, there are still no rules on the looming Cadillac tax. ‘You can only get ready so much until the rules are finalized,’ he adds.

“Not too late

“Despite employers not feeling ready, Meunier says it is not too late to prepare as the major penalties will be assessed month-to-month. To get ready, Meunier says employers should:

  • Understand their contingent workforce and their non-employees, and if those are common law employees that coverage must be offered too
  • Make sure all information systems and data are ready to fill out IRS forms
  • Be prepared to receive and respond to questions employees have about state exchange notices

“Wojcik says employers have some time before the first reporting requirements – which are for the calendar year 2015, although actual reporting isn’t necessary until 2016.”