It is hard to believe that five years ago this week, President Obama signed the Patient Protection and Affordable Care Act (ACA) into law with the primary goals of expanding access to health insurance, protecting patients against arbitrary action by insurance companies and reducing costs. Since its signing – and many years prior – the law has faced stiff opposition with many calling for a full repeal. In fact, there is a case before the Supreme Court right now – King v. Burwell – the outcome of which could unravel the ACA.
King v. Burwell concerns tax subsidies provided by the ACA for lower-income people who purchase health coverage through an insurance exchange. The plaintiffs argue that the subsidies were intended for individuals who purchase insurance through a State-run exchange, not a federally-facilitated exchange. The administration claims that Congress intended for individuals who purchase through a federal exchange when a state exchange does not exist to receive these subsidies as well. The Court heard the case on March 4, 2015 and a ruling is expected in the coming months.
While the rest of the country awaits the outcome of King v. Burwell, employers are facing their own ACA challenges; specifically, complying with the Employer “Pay or Play” Mandate. Under the Employer Mandate, employers with 50 or more full-time employees (FTE) must offer affordable health coverage to FTEs and their children or pay a penalty (employers with between 50 and 99 FTEs have a reprieve until 2016). The penalties are not light: the lesser of $2,000 for each FTE in excess of 30 (80 in 2015) or $3,000 for each FTE who receives a premium tax credit to purchase coverage through an exchange. For more information on the Employer Mandate, click here.
Despite the legal and political uncertainty of the future of the ACA, and with significant penalties for non-compliance at stake, it is important to ensure you are prepared for – and can meet – the record-keeping and reporting requirements, if you are subject to “Pay or Play.” Here is what you are expected to file with the IRS in 2016:
Form 1095-B: Health Coverage. To be filed with the IRS and provided to taxpayers by insurers, as well as by self-insured employers that are not subject to the employer “shared responsibility” mandate, to verify that individuals have minimum essential coverage that complies with the individual coverage requirements.
Form 1095-C: Employer-Provided Health Insurance Offer and Coverage. Verifies compliance with the employer “shared responsibility” mandate and will also be used to establish employee eligibility for premium tax credits if the employer does not offer affordable and adequate coverage.
While many companies expect to find the data they need to generate these reports in their payroll system, the reality is you need more than payroll data; you will need HR, benefits, payroll and all leave (FMLA, Disability, Jury Duty) data in order to accurately process the required reports. Herein lies the problem – this data typically resides in multiple, disparate systems, which means you have to manually extract and manipulate the data using Excel or a similar program. This is a significant drain on time and resources, both of which you can’t spare. There is an answer.
A consolidated human capital management (HCM) solution can help you more efficiently manage compliance – including ACA requirements – while driving business efficiencies. With a unified solution like PeopleStrategy’s eHCM suite that features a single database for HR, payroll, benefits and performance data along with reporting capabilities, compliance is a much simpler, faster and reliable process. In addition to housing all of the necessary compliance data in a single, centralized location, PeopleStrategy eHCM provides access to an ACA “Pay or Play” compliance business intelligence solution that enables you to more easily demonstrate compliance with the ACA requirements.