ACA Employer Update: What You Need to Know Now

What if I had 50 employees one month, but not at the end of the year, now I have 47?

You need to do the calculation in order to determine your ALE status. Which is to count all your current full-time employees, as well as your FTEs for each month. Once you add your full-time employees to your FTEs together that will give you your total for each month. Once you have completed all 12 months you add them all together and then divide by 12, which will give you your average for the year. If the number is 50 or above, then that determines you are an ALE. If it is under 50, then you are not.

What is the affordability rate for 2017 filing?

The affordability rate for your 2017 filings is 9.69%. Remember, when you file in 2018, you are filing the offerings you provided to your employees in 2017, so that is why it is the 2017 affordability rate. It’s just like when you file your W-2s or 1099s, you file in 2018, the amount of money you paid your employees or contractors in 2017.

If we are not required to file, is there a form that we need to file to prove that?

No, there is no form you need to file if you don’t meet the ACA requirements to file. So if you are not required to file, you don’t have to do anything, except, don’t file.

Who must file a 1095-C?

Employers that have 50 or more employees and offer health insurance to their employees either as fully-insured or self-insured, must file form 1095-C.

What if you have a two-year project? Is that too long to be considered an IC?

So this answer is again the same as the previous two questions — sometimes you may have a project that lasts a longer amount of time but it’s still temporary. As long as you again are protecting yourself by having an independent contractor agreement and making sure the other factors show an independent contractor relationship, you may still be fine with your classification.

What is the filing deadline?

Well there are actually two filing deadlines that you need to pay attention to if you are required to file ACA forms.

The first deadline is providing employees their copy of the form — which is January 31. You need to make sure if you are mailing form copies that they are post-marked 1/31 and if handing them out, you need to have them in your employees hands by 1/31.

The second deadline is for filing to the IRS — for employers that are filing paper copies, the deadline is Feb. 28. And if you are filing electronically, then the deadline is April 2. So you get an extra month for filing electronically which can be a big advantage.

But you want to keep in mind that if you have 250 or more forms to file, then you MUST file electronically. You do not have an option to paper file.

If employers have until 4/2 to file their ACA forms electronically, then does that mean employees 1040 forms are not accepted by the IRS until that time?

No. If an employer decides or even has to file electronically because they have 250 or more forms to file, it does not mean their employees have to wait to file their own personal tax returns. Remember, the deadline to furnish the form copy to your employees is 1/31, so once they receive their copy and have their health coverage information, they can proceed to file their personal taxes.

Do the FTEs receive a 1095-C form? And if so, how do we determine who to send it to?

This is a great question, because FTEs can be confusing. But the answer is no. Your FTEs are actually a combination of part-time employees that have an accumulated number of hours that equal up to a full-time employee. So really it’s more than one employee that equals an FTE and there would be no way to determine who to send it to. Your part-time employees that equal up to an FTE are only used to calculate whether you are an ALE or not, you do not need to file a form for them, unless they were full-time in your company at any point in the filing year.

What code is entered on Form 1095-C, line 14 and Line 16, the Section 4980H Safe Harbor and Other Relief, when a full-time employee who is offered coverage either does not enroll or waives the coverage?

There is no specific code that is entered on either line 14 or line 16 of Form 1095-C to indicate that a full-time employee is offered coverage but did not enroll. If a full-time employee has an offer of coverage, the ALE Member enters the applicable indicator code on line 14 to report what type of coverage the employee was offered. The ALE Member may use line 16 to report that it qualifies for a safe harbor or other relief under section 4980H(b) for a given month. The Instructions for Forms 1094-C and 1095-C explain when an ALE Member may enter a code on line 16.

I know you mentioned Safe Harbor in the webinar, but can you explain it in more detail?

In order to determine whether affordable coverage is offered to employees, the IRS has provided three methods, that are termed as “safe harbor” in which the employer can use one of these methods to estimate an employee’s income using information that the employer has. If an employer can then satisfy the affordability requirement by using any of these safe harbor methods, the offer of coverage would then be considered affordable under the employer requirements.