2016 is barely half over, but it’s never too early to begin planning for next year. Last year saw an increase in regulations companies had to comply with regarding the ACA.
In 2017, companies will have to deal with even more ACA compliance issues. Employers need to look ahead to safeguard their business against potential fines or legal difficulties.
1. Plan for the Cadillac Tax
The Cadillac tax, which is a 40 percent excise tax on plans with annual premiums exceeding $10,200 for individuals or $27,500 for families, doesn’t begin until 2020. Still, it is important for businesses to look ahead while preparing for ACA compliance.
Companies should conduct a financial assessment of their current coverage to determine which plans exceed the thresholds. After determining which plans meet the thresholds, organizations need to determine what steps they can take to avoid this tax.
2. Determine your number of employees
It is important that each business knows exactly how many workers it employs during 2016. This year is the first year that all companies with 50 or more full-time equivalent employees have to offer minimum essential coverage to at least 95 percent of their employees.
Both of these numbers are increases from previous thresholds. Previously, employers of 100 or more full-time equivalent employees had to offer qualifying coverage to at least 70 percent of their staff.
To get a total number of full-time equivalent employees, use the IRS formula. Add up the hours that non-full-time employees are paid during a year and divide the total by 2,080, then add that amount to your number of full-time employees. The answer is the number of full-time equivalent employees.
3. Review compliance tactics
Every organization needs to check their 2017 health plan design and eligibility terms against employer shared-responsibility strategy. Companies need to determine whether medical options meet minimum value and essential coverage, and affordability standards.
Individual and IRS coverage-reporting processes need to be evaluated to confirm they meet any changes necessary for 2017.
4. Prepare for no extra filing time
This year, 2016, employers received an extra two months to distribute necessary forms to employees, and three months to file with the IRS. Current deadlines are as follows:
|ACA Information Reporting Forms||2015 Tax Year Deadlines
(forms filed in 2016)
|2016 Tax Year Deadlines
(forms filed in 2017)
|Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met).||March 31, 2016||Jan. 31, 2017|
|Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper.||May 31, 2016||Feb. 28, 2017|
|Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. *||June 30, 2016||March 31, 2017|
|*Any employer filing 250 or more information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.|
The government may still offer an extension, later in the year, but companies need to plan as if these dates are concrete.
5. Annual out-of-pocket limits
Companies need to be aware that the proposed annual out-of-pocket limits for 2017. Proposed limits for the 2017 plan year are $7,150 for self-only coverage and $14,300 for family coverage.
Both of these numbers are an increase over last year’s limits. Businesses should evaluate and adjust their health plans accordingly.
Last tax season was the last date that businesses were extended good faith effort for incorrect or missing data regarding ACA compliance. Employers must now be entirely accurate and thorough when complying with the ACA-related rules.
To avoid penalties, employers should be proactive and remember these five issues when dealing with their company’s 2017 ACA compliance.