Employer Mandate
You may have thought the penalty for applicable large employers who fail to offer minimum essential coverage was $2,000 per employee. You may have also thought that if you offered coverage, but it was unaffordable and/or didn’t provide minimum value, then the penalty was $3,000 per employee who waived coverage and received a subsidy in the Exchange.
The cost for failing to comply with the new reporting requirements of the Affordable Care Act (ACA) just got steeper. Under a trade bill signed into law by President Obama at the end of June, the penalties for failing to comply with the new reporting requirements, which are used to help the IRS enforce the Individual and Employer Mandates, have substantially increased.
Failing to complete the reporting:
The IRS has released Notice 2015-17 with some new information about Employer Payment Plans, which are plans that are used to reimburse employees with pre-tax dollars for individual market coverage (e.g. HRA). Previous guidance had essentially eliminated Employer Payment Plans as an option for actively employed workers because they would not be able to comply with all of the Affordable Care Act (ACA) market reforms. Notice 2015-17 elaborates on the IRS’ position of Employer Payment Plans.
The IRS has released the final version of the forms and instructions as it relates to the new employer reporting requirements associated with the Employer Mandate and other Affordable Care Act (ACA) provisions. The forms are identical to the draft versions that were released last summer, but there have been revisions made to some of the instructions. The forms and instructions can be accessed below:
Section 6055 reporting (used to report which individuals are covered by the employer sponsored plan)
The Affordable Care Act (ACA) defines a small employer as one with up to 100 employees, but the law gave states the ability of using a definition of up to 50 employees until the end of 2015. As a result, most states, including Illinois, used a definition of up to 50 employees. However, that will change in 2016, and all states will be required to classify their small group market as up to 100 employees.
Why does this matter?
Minimum Essential Coverage and Minimum Value are two terms that are mistakenly considered the same by many people, but in fact, these terms have different definitions.
Minimum Essential Coverage is the type of coverage needed to satisfy the Individual Mandate requirements. The most common forms include the following health plans:
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