IRS Reminder: Conduct a Mid-Year ACA ‘Checkup’
Workforce Size Impacts ‘Pay or Play’ and Information Reporting Requirements
The IRS is reminding employers to conduct a mid-year examination of how many full-time and full-time equivalent employees (FTEs) they have in the current calendar year in order to determine whether they must comply with the employer shared responsibility provisions (“pay or play”) and corresponding information reporting requirements of the Affordable Care Act (ACA) in the next calendar year.
Employers With Fewer Than 50 Employees
Employers with fewer than 50 full-time employees, including FTEs, in the preceding calendar year are generally not subject to pay or play for the current calendar year. Other provisions of the ACA, however, may still be applicable to these employers, including:
- Information Reporting: Small self-insured employers must file Forms 1094-B and 1095-B with the IRS about individuals they cover and furnish a Form 1095-B to employees enrolled or responsible for those enrolled in the plan about the coverage provided. If the small employer’s health coverage is provided through an insurance policy, the issuer will file and furnish these forms.
- SHOP Eligibility: Employers with 50 or fewer full-time employees, including FTEs, can purchase insurance through the Small Business Health Options Program (SHOP) Marketplace.
- Small Business Health Care Tax Credit: Employers may be eligible for the small business health care tax credit if they do all of the following:
- Cover at least 50% of full-time employees’ premium costs;
- Have fewer than 25 FTEs with average annual wages of less than $51,800 in tax year 2016 ($51,600 in tax year 2015); and
- Generally purchase coverage through the SHOP Marketplace.
Employers With 50 or More Employees
In general, employers with at least 50 full-time employees (including FTEs) in the preceding calendar year are applicable large employers (ALEs) for the current calendar year. ALEs are generally required to comply with pay or play. Other ACA provisions which may be applicable to ALEs include:
- Information Reporting: ALEs must file Forms 1094-C and 1095-C with the IRS and furnish a Form 1095-C to full-time employees about the health coverage they offered. If the ALE provides self-insured coverage, the employer must also include information about covered individuals on all applicable Forms 1095-C.
- Pay or Play Transition Relief: While ALEs are generally subject to pay or play, transition relief is available for certain employers for 2015 and 2016.
- SHOP Eligibility: Starting in 2016, some states may make the SHOP Marketplace available to businesses with up to 100 employees.