With all the recent changes to employment due to the global pandemic, navigating ACA compliance can be challenging. ACA noncompliance may lead to shared responsibility payments. Businesses with 50 or more full-time employees must offer affordable, minimum essential health coverage.
If you are a business owner and qualify as a “large employer” — any company with 50 or more full-time or full-time equivalent employees (employees who average 30 hours per week) — there a few things you need to know regarding employee coverage. If you don’t comply with the regulations set for you, you will face significant penalties, which can quickly add up.
Employee benefit programs have been mandatory for all applicable large employers (ALE) since the Affordable Care Act, enacted in 2010. This Act requires employers to offer minimum essential coverage to all employees who work in a company with a staff of 50 or more. Failure to comply with this requirement will cause penalties for these companies and will likely lead to an IRS Audit down the road. Here is more information regarding the importance of Penalty A and Penalty B compliance.
Minimum Essential Coverage was created when the Affordable Care Act was enacted. Before the Affordable Care Act began, people who already had medical conditions or had used too much medical care in the past were able to be denied coverage by insurers. Minimum Essential Coverage ensures that all ACA-compliant health care plans offer insurance to all enrollees regardless of health status or which plan they select. What exactly does minimum essential coverage entail?
All applicable large employers (ALEs) must comply with the Affordable Care Act (ACA), which requires employers to offer minimum essential coverage to all employees.
If an employer does not comply with this employee coverage requirement, it could lead to penalties for the employer and potentially an IRS audit.
Below is a breakdown of ACA penalties A and B and how they could affect your company.
First, who is considered a large employer?
Any company or organization with an average of at least 50 full-time employees or “full-time equivalents (FTEs) is considered an applicable large employer.
*For the purposes of the ACA, a full-time employee is someone who works a minimum of 30 hours a week.
The ACA was created in 2010 to offer more affordable health benefits to a wider range of people. Any ACA-compliant benefit plan must cover these 10 health benefits:
Additionally, ACA benefits cover birth control and breastfeeding support.
Employers must offer at least Minimum Essential Coverage (MEC) to any benefit-eligible employee. Non-compliance will generally result in a penalty of $2,750 annually PER eligible employee.
Employers must offer a minimum value plan that meets 60% actuarial value, including hospitalization services.
The MV plan must be offered at a maximum contribution of 9.86% of the employee’s income – YOU pay the difference.
For example, take a California minimum wage employee: A $10.00/hour employee working a minimum of 30 hours per week has a maximum employee contribution of $128.18 per month.
If the plan cost is $300, YOU pay the difference of $171.82 per month.
Non-compliance will generally result in an annual $4,120.00 penalty PER employee who enrolls in coverage through the state exchange AND receives a premium subsidy.
The individual mandate went away starting January 1st, 2019, for most Americans.
Those individuals in specific states that maintain the individual mandate, including the District of Columbia, Massachusetts, or New Jersey, will continue to be penalized according to the individual mandate.
These penalties can easily add up with over 100 employees eligible for health coverage. At SBMA, we want to help you avoid any potential penalties for lack of proper insurance.
Contact an SBMA representative for more information regarding your employer benefit needs.
Under the Affordable Care Act (ACA), large employers are required to offer health insurance to their employees. Despite everything going on, the IRS will continue issuing letters to large employers regarding penalties for years prior. Beginning in 2015, employers that do not meet the ACA standards can be assessed by a shared responsibility payment. Here are a few of the details behind the ACA health plan penalties and what that may mean for your business:
In just a few months, the coronavirus has caused the global economy to enter a major downturn that could last for years. While nearly everything in our lives has been affected by the pandemic in some way, group health benefits have endured one of the greatest impacts of any industry. Congress has passed new laws, and employers must consider the effect of the layoffs, furloughs, and other workforce changes in regard to the ACA.
Due to COVID-19, ACA compliance has become a bit more complicated. As an employer, you must ensure that all your paperwork and practices are ACA compliant. If individuals wrongly receive a PTC, the employer is responsible for proving to the IRS that the individual did not qualify. It is now more important than ever to have your information in order, in case of future issues. In the ACA times article below, you will see why ACA penalties may increase this year, and how you can prevent potential penalties for your business.