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Sunday, 13 September 2015 20:05

Q&A: Mary Bauman, Miller, Johnson, Snell & Cummisky PLC

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Mary Bauman Mary Bauman COURTESY PHOTO

Employers early next year will have to tell the federal government which employees are enrolled in the company-sponsored health plan. The reporting requirement is the latest provision of the federal Affordable Care Act that requires employers to gather and submit data to the Internal Revenue Service. The information will enable the IRS to enforce a requirement for employers with 50 or more full-time employees to offer health coverage that meets the ACA’s affordability and coverage mandates, as well as the individual mandate that requires everyone to have health coverage.

“Beginning in the first quarter of 2016, employers are required to undertake a massive reporting responsibility,” said Mary Bauman, an employee benefits attorney at the Grand Rapids office of Miller, Johnson, Snell & Cummisky PLC. “It’s really a big, big deal. A lot of employers are already gearing up for it, and we have, unfortunately, some employers who really haven’t started getting ready yet and that’s going to impose big responsibilities on them, particularly in the last quarter of 2015.”

Bauman spoke with MiBiz about what employers should expect next year.

When do the new requirements kick in?

The first year for which reporting is required is 2015, with the reporting due in the first quarter of 2016.

How does the reporting requirement work?

The timetable and deadlines work in the same way as the W-2. The purpose of the form is to help the IRS enforce the individual mandate penalty and the large employer ‘pay-or-play’ penalty under the ACA.

Large employers subject to the pay-or-play penalty (a requirement to either offer employee health coverage or pay a penalty) will need to issue an employee statement to all full-time employees as to whether they were offered health coverage, whether it was affordable and whether they and their family members enrolled. 

How often must this be reported?

While the reporting is required annually, the statements must inform employees of this information on a monthly basis for the calendar year. The employee statements must then be sent off to the IRS along with a transmittal form, which asks for additional information regarding the employer and its offer of coverage on an aggregate basis, again to help the IRS determine if a pay-or-play penalty applies.

What happens if an employer doesn’t do it?

There’s a penalty of $250 per return, so it’s something serious.

Are employers generally prepared for this provision?

The larger the employer, the more likely that they have taken steps to do this, and there are some third parties that are out there helping employers at least gather the information or in some instances help prepare the form.

What are some of the roadblocks for employers?

One of the challenges is we don’t have the final version of the form yet. We only have draft versions. So even for an employer that’s relatively conscientious, we’re still waiting for the final version of the form.

What differences are there among smaller companies?

If it’s a smaller employer, let’s say in the 100 to 250 (employee) range, they may not have taken many steps yet, but it’s not too late.

What should these employers do even though it is late in the process?

They should start paying attention to this now. As you can imagine, and unlike the W-2, they can’t just get all of the information right off of their payroll records. They have to get information about health plan enrollment and also report who is full-time. And they need to have established some type of measurement period to track that. You’re gathering pieces of information from different sources.

What should an employer already have done to position themselves to meet these requirements?

If they haven’t figured out who is full-time based on a measurement period, and that’s typically a look-back measurement period, they need to do that now and figure out who is full-time for 2015 for purposes of the reporting. They are only issuing these statements generally to employees that are full-time.

What else?

Then they have to figure out if they are missing any information such as dependent Social Security numbers. They should start collecting that now. And then they have to figure out, OK, if I offered health coverage this year, I have to figure out was it affordable.

What’s on the horizon for the ACA?

It’s a provision that’s not kicking in now, but it’s really starting to come to the employers’ forefront and their thinking, and that is the “Cadillac tax” that does not take effect until 2018. We’re already starting to do benefit planning that might ripple into 2017, so it’s really not too early to think about the Cadillac tax. (The tax is a 40 percent excise tax on overly generous, high-cost health benefits.)

What might the Cadillac tax mean for employers?

Actuaries and other experts look at this as we’re on a collision course. What I mean by that is that employers who provide health coverage, even if they provide a fairly low level of health coverage in order to avoid the pay-or-play penalty, may find that within the next 10 years that just offering that minimal level of coverage will trigger the Cadillac tax. In other words, all employers will either have to pay a pay-or-play penalty or the Cadillac tax. They won’t be able to avoid both.

What could be done to fix the situation?

Congress is aware of this. We’re thinking that maybe there may be some legislative fixes to this. There seems to be some bipartisan support for addressing this problem.

Interview conducted and condensed by Mark Sanchez. COURTESY PHOTO

Read 1930 times Last modified on Monday, 28 September 2015 11:01

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