To continue the review offered by Michael D. Thomas, LifeHealthPro.
Although the Affordable Care Act was passed in 2010, there has been a timeline of implementation — with some components being immediately implemented, while others have been implemented over time in 2012, 2013, 2014 and 2015.
In addition, some components of the ACA were delayed or deferred.
No. 2: Reporting requirements and penalties
The ACA requires employers and/or health insurance issuers to report to the IRS information about employer-sponsored health coverage. Reporting requirements were delayed from 2014 until the 2015 tax year to coincide with the delay in the employer play-or-pay mandate.
- Changes in reporting dates
The IRS has offered some relief for the 2015 reporting forms, due in 2016. Penalties will not be imposed on a filer for reporting incorrect or incomplete information if the filer can show that it made good-faith efforts to comply with the information reporting requirements for 2015.
IRS Notice 2016-4 issued on December 28, 2015, announced an extension for 2015 information reporting. The notice extends the due date for these two kinds of situations:
- For furnishing to individuals the 2015 Form 1095-B, Health Coverage, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 1, 2016, to March 31, 2016, and
- For filing with the IRS the 2015 Form 1094-B, Transmittal of Health Coverage Information Returns, the 2015 Form 1095-B, Health Coverage, the 2015 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically.
- Penalties for applicable large employer failure to report
Penalties for large employer failures to report have to do with information returns and payee statements. They are itemized as follows.
Information returns: The penalty for failure to file an information return generally is $100 for each return for which such failure occurs. The total penalty imposed for all failures during a calendar year cannot exceed $1,500,000.
For returns required to be filed after December 31, 2015, the penalty for failure to file an information return generally is increased from $100 to $250 for each return for which such failure occurs. The total penalty imposed for all failures during a calendar year after December 15, 2015 cannot exceed $3,000,000.
Payee statements: The penalty for failure to provide a correct payee statement is $100 for each statement with respect to which such failure occurs, with the total penalty for a calendar year not to exceed $1,500,000.
The penalty for failure to provide a correct payee statement is increased from $100 to $250 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,000,000. The increased penalty amount applies to statements required to be provided after December 31, 2015.
Note about intentional situations: Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the requirement to furnish a payee statement.
No. 3: Small Business Health Options Program (SHOP)
The Small Business Health Options Program was designed for small employers to be able to provide health and dental coverage to their employees and to enable these small employers to have some of the same purchasing power, range of choices, and ability to pool risk that are available to large companies. There have been four significant changes in the SHOP program for 2016.
- Size of eligible companies
On October 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act. The PACE Act amended the definition of “small employer” so that it would continue to apply to employers with one to 50 employees, rather than changing to one to 100 employees as of 2016 as provided in the original ACA.
However, each state can still decide whether to adopt the one-to-100 employee definition of small employer if they choose. This enables states to be able to choose to expand the participation in the SHOP marketplace from employers with one to fifty employees to employers with one to 100 employees. It should be noted that currently only four states have accepted the expansion: California, Colorado, New York, and Vermont.
- Change in the SHOP marketplace Minimum Participation Requirement (MPR)
The SHOP marketplace MPR has changed for 2016, generally making it easier for employers to use the SHOP program. In most states, 70 percent of employees must accept the offer of SHOP coverage or be enrolled in other types of coverage for the company to participate.
However, it should be noted that the following states have MRPs of 75 percent: Iowa, Nevada, New Hampshire, New Jersey, South Dakota, Tennessee, and Texas.
The 2016 changes to the MPR requirement have made it easier for employees to enroll in SHOP Marketplace coverage. In 2015, employees were not counted toward the MPR if they had coverage through another job, another person’s job, or a government program such as TRICARE or Medicare.
In 2016, employees with non-SHOP coverage will be counted toward the MPR. Beginning in 2016, the Minimum Participation Rate is calculated as follows:
- Number of employees ENROLLING in SHOP
- Number of employees OFFERED enrollment in SHOP
Participation rate must equal 70 percent (or 75 percent for the exceptions noted above).
- Changes in health and dental coverage options in SHOP
Beginning in 2016, employers may offer their employees one of three options through SHOP:
- Health coverage only
- Dental coverage only
- Both health and dental coverage
Qualified employees can choose either health, dental, or both in this situation. Employers may offer health and dental coverage to employee dependents as well. The dependents must enroll in the same plan as the employee.