Smart Benefits: The Employer Mandate Has Arrived

Monday, January 05, 2015

Rob Calise, GoLocalProv Business/Health Expert

After much debate and delays, the Employer Mandate is here. This “Play or Play” provision of the Affordable Care Act requires all employers with 50 or more full-time equivalent (FTE) employees to offer a certain level of health insurance coverage at an affordable rate to all full-time employees – or face a penalty.

Penalty Parameters

Large employers (those with 100 or more FTEs) that don’t comply with the Mandate may begin incurring penalties in each month of the 2015 tax year. (Mandate penalties are incurred on a monthly basis, but paid annually.) Midsized employers (those with 50-99 FTEs) enjoy an added year of reprieve (until 2016) as long as they didn’t reduce their workers’ hours/workforce to get below the 99 employee threshold without a bona fide reason or materially reduce their health plan as it existed on February 9, 2014.

Steps to Comply

The IRS will only apply Mandate penalties if the employer is subject to the Mandate, fails to comply, and has at least one full-time employee shop in an exchange and receive a federal premium subsidy. Regardless of which employees choose to shop in an exchange or what premium subsidies they receive, employers can avoid penalties by following these three steps:

Offer a health plan that meets the minimal essential coverage requirements,

Offer at least one such plan at an “affordable rate,” and

Offer at least one such plan to all full-time employees who regularly work 30 or more hours a week and their dependent children.

New Mandate Reporting Requirements

The arrival of the Mandate also means new IRS reporting requirements.

Section 6056. Employers with 50 or more FTEs must begin Section 6056 reporting for the 2015 tax year. These forms must be filed with the IRS and provided to employees in early 2016. While the actual reporting won’t take place until 2016, some of the data required must be classified by month so it’s time to start tracking this data.

Form 1094-C./1095-C Employers subject to the reporting requirements must complete and submit one Transmittal Form (IRS Form 1094-C) for the organization and one Employee Statement (IRS Form 1095-C) for each employee. Employers who sponsor a self-funded health plan have additional reporting requirements.

Rob Calise is a founding partner of Cornerstone Group, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate ofBryantCollege with a BS in Finance.

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