The Affordable Care Act (ACA) is often referred to as: confusing, uncertain, and even scary. Clearly, the regulation – all 7000+ pages of it – is one that will take a significant period of time to really get ironed out. But certainly, regulators are trying. The following 5 points are changes that have recently been enacted that you should know about:
- Reporting Deadlines. Large employers are required to file Form 1094-C to the IRS and Form 1095-C to the IRS and individuals for all full-time employees beginning with calendar year 2015. That means, employers need to work on this NOW.
Change. The deadline for furnishing returns to individuals is now March 31, 2016 (moved back from February 1). The deadline for filing to the IRS is now June 30, 2016 (moved back from March 31). Employers who do not file electronically have until May 31 to file with the IRS.
- Cadillac Tax Delay. The recently signed “Protecting Americans from Tax Hikes Act of 2015: (PATH Act) is intended to delay the ACA’s 40% excise tax (otherwise referred to as the “Cadillac Tax”) until 2020. Originally the excise tax was to be applicable in 2018. Further, employers will now be able to write off any Cadillac Tax paid as a deductible business expense.
- Automatic Enrollment Repealed. The original ACA requirement that employers with 200 or more employees automatically enroll employees in a health plan, therefore requiring an affirmative “opt out”, has been repealed via the PATH Act.
- Safe Harbor Percentages. Under the ACA, an annual adjustment for inflation of 9.5% of household income shall be used to determine whether a medical plan is “affordable”. This annual adjustment may be used for several safe harbors: the W-2 Safe Harbor, the Rate of Pay Safe Harbor, and the Federal Poverty Line Safe Harbor. *Employers can use 9.56% for the year 2015 and 9.66% for 2016.
- Penalty Increases. Large employers who fail to provide coverage will be subject to increased penalties. The first (larger) penalty is for employers who fail to offer coverage to at least 95% (70% in 2015) of their employees and this penalty has increased from $2000 to $2,080 in 2015 and $2,160 in 2016. The second (smaller) penalty is for employers who offer coverage but fail to offer affordable coverage to an individual who receives an Exchange subsidy. This penalty has increased from $3000 per individual to #3,120 in 2015 and $3,240 in 2016.
Contact Datamatics Management Services, Inc. for more information and tools to help comply with the ACA! www.datamaticsinc.com