Affordable Care Act Challenges
The Patient Protection and Affordable Care Act ACA, has officially been in effect since January 1, 2014. As you are by now familiar, the federal government decided to roll out some aspects of the plan over multiple years in order to make the implementation more manageable for employers. As such, there are some major changes to the ACA for 2016 that employers should be aware of.
First, the minimum penalty for a non-compliant individual who does not sign up for a health care plan is increasing again in 2016. To provide some background, uninsured taxpayers who did not have health insurance or qualify for an exemption in 2014 were required to pay either one percent of their modified adjusted gross income or $95, whichever was greater. In 2015, the penalty rose to either two percent of their modified adjusted gross income or $325, whichever was greater. In 2016, the penalty will be either two and a half percent of their modified adjusted gross income or $695, whichever is greater. The maximum penalty for an uninsured family is $2,085. Starting in 2017, the penalties are scheduled to increase along with the rate of inflation.
Second, as of 2016, the ACA’s employer mandate, which requires certain employers to offer affordable health insurance to their employees, is in full effect. In 2015, businesses with 100 or more full time equivalent employees were required to offer at least 70 percent of those employees health insurance coverage. As of 2016, employers with 100 or more full time equivalent employees must offer coverage to 95 of their eligible employees or else they will face financial penalty. Companies with 50 to 99 full time equivalent employees must also offer health insurance to 95 percent of those employees. Small businesses with less than 50 full time equivalent employees continue to be exempt from penalties if they do not offer health insurance.
Third, insurance premiums will rise. This is already known because the ACA requires any insurance company who wants to make a double-digit increase in their rates to explain the increase to the Office of the Insurance Commissioner in their state. That office then makes a determination as to if the increase is justifiable. According to the Washington Examiner, while there were only 121 requests for double-digit rate hikes for the 2015 calendar year, there were 231 requests for 2016. Of those 231 requests, 126 plans asked for a 20 percent increase, 61 asked for a 30 percent increase, 26 plans asked for a 40 percent increase, and 12 plans asked for an increase of 50 percent or more!
As a Human Resources professional, you are bound to face some challenges with your required reporting in 2016. For example, this is the first time you will be required by law to file reporting paperwork with the Challenges with reporting your 2015 tax year data
For any challenges you may face with reporting your 2015 tax year data, remember that 2016 is a new year, and you can make changes now that will help you with reporting when January 2017 rolls around.
First, you can choose to do all of your reporting in-house. To do this effectively, you need the proper staffing to handle all of the tasks that come with it, such as collecting data, coordinating data, tracking employee hours work and leave time used, preparing the 1095-C forms, and making sure employees receive copies of the 1095-C filed for them with the IRS.
Second, you can choose to outsource to Human Resources vendors to collect all of the required information for your employees. However, at this time, you should be aware that you may not find one vendor with strengths in collecting all of the data required by the ACA. Therefore, you may need to hire more than one vendor to do this, as well as designate an employee to be the liaison between your company and the vendors.
Third, you can locate an ACA compliance expert to handle the reporting. This company should have the expertise in health care plans and technology necessary to get the job done for your company and prevent your business from incurring unnecessary penalties.
In summary, we are now reaching the end of the rollout of ACA requirements. While the last several years may have seemed challenging with all of the new rules and reporting to implement, you will find that over time, your Human Resources team will grow comfortable with these requirements and establish systems which will increase the ease and efficiency of your company’s data reporting.