Treasury Department extends ACA requirements for employers

Health Insurance

January 13, 2016

To provide a helping hand to American businesses, the Treasury Department announced on Dec. 28, 2015, an extension for companies to send in certain tax forms. Formerly, the Affordable Care Act (ACA) required businesses to submit specific forms showing which employees were actually covered.

Now, with the deadline being pushed back to March 31, 2016, employers have an additional two months to submit these forms. The Treasury Department has also allowed companies to delay reporting this information to the IRS until June 2016. In addition, the deadlines to report this information to the IRS have been extended: three months past the Feb. 29 due date for paper filings; and three months past the March 31 date for electronic returns.

Delays designed to benefit businesses

The Treasury Department explained that the reporting rules were extended to provide the business community with more time to compile the information needed. In addition, the Treasury felt that these requirements could overwhelm human resources departments.

These tax requirements, only apply to those companies with more than 50 full-time and full-time equivalent (FTE) employees. Under the ACA, 2015 was the first year that these companies had to track and report their employees’ insurance coverage, as well as offers for coverage. Those companies with less than 50 employees are exempt from these requirements.

The reporting requirements are a new experience for businesses. The requirement for employees’ coverage and the employer mandate were developed to help the IRS evaluate businesses and employees. They were also supposed to help the IRS identify people attempting to cheat the system or avoid their legal obligations. But the delays may lead to the IRS not receiving the companies’ reports until the middle of 2016. And as most taxpayers will have filed their forms and received refunds by that point, this could increase the chance of people attempting to cheat the system.

Employer mandate deadline delayed

The companies that will benefit from the reporting extension are the same ones affected by the ACA’s employer mandate in 2016. While originally set to begin in 2014, in 2013, President Obama delayed its full enforcement until 2015, for companies with 50-99 employees. Then, in 2014, he again delayed it until 2016, for companies with fewer than 100 workers. The Treasury Department stated that this extension shouldn’t affect the majority of individual taxpayers.

Under the mandate, companies with 50 or more full-time and FTE employees must provide health insurance for the majority of employees. Specifically, they must offer at least the equivalent of a bronze exchange plan for employees working 30 hours or more each week. Bronze plans usually have the lowest premiums, covering 60 percent of expenses.

Should employers fail to meet the mandate’s requirements, they could face substantial fines levied on a monthly basis. If the fine is owed because the employer didn’t provide adequate coverage, they’ll owe a flat $2,000 per employee; the first 30 employees are excluded. However, if only a few employees’ coverage is unaffordable, or if it doesn’t meet minimum value standards, the fine is $3,000 per full-time employee who got cost assistance. But the fine will never be more than $2,000 per full-time employee.