Top 5 Things You Need to Know About the ACA

The Affordable Care Act is designed to reduce healthcare costs, expand coverage for the uninsured, and increase quality of care for people across the United States.

Like most pieces of legislation, however, the ACA can be confusing, making it difficult for many businesses to comply with the law’s requirements. But come 2016, regardless of its complexity, most businesses will be on the hook for ACA compliance. Want to avoid hefty fines and penalties for not knowing how the ACA impacts you? We’ve put together a super simple primer for understanding the requirements so you can stay compliant and penalty free in 2016.

What You Need to Know

#1 - Compliance requirements are based on the number of employees you have.

To determine whether or not your business is subject to ACA requirements, you’ve got to first determine if you’re an Applicable Large Employer (ALE). To be considered an ALE, your company has to have 50+ full-time employees and full-time equivalent employees (FT/FTE).

#2 - Your total number of employees includes full and full-time equivalent employees.

In light of the ACA, calculating your total number of employees is unfortunately not as easy it as it seems. That’s because the ACA classifies “full time” employment as 30 hours a week of work or more. So, when you’re calculating your total number of employees, you’ve got to include both full-time employees as well as those who work the equivalent of full-time hours.

#3 - Your business must offer “affordable” health insurance coverage to employees.

Providing access to “affordable” health insurance of “minimum value” is one of the core purposes of the ACA. Problem is, most businesses don’t know what these terms mean or how they apply to their workforce. So let’s take a look at the definitions for both terms:

“Affordable” Health Insurance

  • Less than 9.5% of annual household income
  • Employers can also determine affordability by calculating 9.5% of employees W2 wages, hourly pay rate, or the Federal Poverty Level for an individual

“Minimum Value”

  • 60% of the total cost of an employee’s medical expenses

#4 - You’ve got to keep track of employee information to make all of this go smoothly.

Completing the aforementioned calculations is core to ACA compliance, but if you’ve got a diverse workforce comprised of various types of employees (full, part-time, seasonal, and so on), this can be a very serious challenge, particularly for small businesses that often have just one or two people managing the process. Fortunately, this is where tools like Zenefits come in handy. By onboarding every new employee through the HR platform’s online dashboard, you can capture and retrieve all of this information at any time, without the hassle of paperwork.

#5 - You need to submit three key documents to guarantee compliance.

If you’re an ALE, collected all the necessary info from your workforce, and made the necessary calculations, then it’s time to complete the three documents required for ACA compliance: the 1094-C, 1095-C, and the Written Statement to each employee.

Form 1094-C
Employer Transmittal
Accounts for each of the following, per 2015 calendar month:

  • Full-time employees
  • Total headcount
  • Whether Minimum Essential Coverage was offered
  • Whether an applicable 4980H “Safe Harbor” was used

Deadline for documents to be mailed: February 29, 2016
Deadline for document to be transmitted digitally: March 21, 2016

Form 1095-C
Employee Statement
Accounts for each of the following, per 2015 calendar month:

  • Proof of offer of coverage (with code)
  • Employee’s share of the lowest cost monthly premium
  • Whether an applicable 4980H “Safe Harbor” was used

Deadline for documents to be mailed: February 29, 2016
Deadline for document to be transmitted digitally: March 21, 2016
Written Statement to Each Covered Employee

  • The employer’s name, address, and contact information
  • The information for the employee on the return being filed

Deadline for Statement Sent to Employee: January 31, 2016

ACA Compliance Resources

Staying ACA compliant isn't easy, especially if you have a small human resources team and lots of employee information to collect. Luckily, you can get help managing ACA compliance and storing required documents with Zenefits. If you're interested in learning more about how Zenefits can help, just request a demo today.

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