Page 24 - December 2018 | Cleveland Metropolitan Bar Journal

BarJournal FEATuRE

JULY/AUGUST 2015
exTrA Am I Still Supposed To Be

in ACA Compliance?

BY JEFF SMITH

s the year is winding down, your many votes in the House of Representatives — such a way to ensure that it will not owe a penalty
clients are (hopefully) preparing although none that became effective — over or plan for the risk of owing a penalty.
for 2018 group health plan the repeal of the ACA. During his campaign, Most employers that offered health care
reporting obligations and 2019 President Trump vowed to end the law. But coverage before the ACA continue to do so, with
Aopen enrollment for next year’s has that actually happened? For individuals, the added constraints of affordability. Employers
medical benefits. You may have received questions the answer is yes. Employers are not so lucky. that continued to offer coverage had to do so
about this and are wondering: Do employers still The Tax Act, which passed in late 2017, sought at a rate that was affordable under the law. You
have to comply with the Affordable Care Act to address the Individual Shared Responsibility will recall that, initially, employees could not
(ACA)? The short answer is yes. Payment, commonly known as the individual be required to pay more than 9.5 percent of
There has been so much political noise over mandate, portion of the ACA. As a reminder, household income for employee-only coverage.
the ACA, beginning long before its enactment the individual mandate was the requirement That percentage amount indexes up slightly each
in 2010, that you probably don’t pay much that all individuals either purchase a certain year and is set at 9.86 percent for 2019.
attention to it anymore. There have been level of health insurance or pay a penalty when None of those requirements have changed.
filing their income tax returns. The Tax Act The ACA also imposed reporting requirements
did not eliminate the individual mandate from on employers and insurance providers so that
the law; however, it did reduce the penalty an the Internal Revenue Service would know
Niki Z. Schwartz individual would have to pay to $0 (but even this which employers offered coverage and which
employees received offers of coverage. This
doesn’t go into effect until 2019). This means
Mediator/Arbitrator that individuals who don’t have proper coverage reporting is completed on Form 1095. The Form
for 2018 must still pay the penalty when filing 1095 is provided to employees at the same time
their 2018 taxes in early 2019. as the Form W-2 and then sent to the IRS. These
The Tax Act did not address the Employer reporting requirements have not changed, either.
Shared Responsibility Payment, also known as the With both the continued application of
employer mandate. The employer mandate is the the employer mandate and the reporting
portion of the ACA that requires employers with requirements, you should certainly continue
50 or more employees to either offer affordable your company’s ACA compliance. If that is not
and adequate health care coverage to their full- enough to convince you, consider the ongoing
time employees or risk paying a penalty if any of enforcement of the ACA by the IRS.
their employees receive a premium subsidy. The IRS has taken all of the information it
To comply with the employer mandate, an received regarding employer-provided health
employer would need to first determine whether coverage. This includes employer reporting on
“If he can settle it employs 50 or more employees to qualify as the Form 1095, individual reporting through
the federal income tax returns and information
an “applicable large employer.” For the current
a prison riot, year, this status is determined by counting received from exchanges indicating whether
individuals have received premium subsidies.
employees in the prior year, on a monthly basis,
he can settle and applying a full-time-equivalent employee By analyzing all of the information, the IRS
then assesses employer mandate penalties
anything!” factor. So, each employee who works 120 hours where it found that an employee received a
or more is counted as a full-time employee, and
each employee who works less than 120 hours premium subsidy. You might think this doesn’t
is counted as a fraction of an employee based matter if you are in compliance, but consider
216-696-7100 upon how their hours of work compare to 120 the following situations we have seen during
this past year:
hours. Once an employer determines that it is an
nzs.adr@gmail.com “applicable large employer,” it then would develop • An employer that was otherwise in
a strategy to either offer health care coverage in compliance was assessed a penalty in excess
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