Despite a history of legal challenges and redefinitions in its five years of existence, early 2016 marks the beginning of mandatory reporting and compliance for the Patient Protection and Affordable Care Act (commonly known as the Affordable Care Act or ACA), bringing home the reality of this legislation for construction businesses and their financial professionals.
However much or little they have followed the events surrounding the ACA, employers must now assess their responsibilities under the current law. However, compliance alone may not cover all of the potential cost savings under the ACA – not without taking advantage of its opportunities.
Compliance 101
Compliance for employers in 2016 revolves around two mandates: 1) employer shared responsibility provisions and 2) information reporting requirements.
Employer shared responsibility essentially has two sides, often referred to as “pay or play.” Companies that are large enough to fall under ACA requirements, known as applicable large employers (ALEs), must offer affordable minimum-value coverage to at least 95% of their employees who average 30 hours per week (or 130 hours monthly) and their dependents.1
Failing this mandate, the ALE is responsible for employer shared responsibility payments, which can be assessed at $2,000 per full-time employee, excluding the first 30 full-time employees. If an employer does offer this coverage to 95% of its full-time employees, then it will still be subject to a penalty of $3,000 annualized for each full-time employee who receives a tax credit under the ACA; these penalties will be adjusted for inflation in the future.
Compliance, therefore, would involve either extending mandated offers of coverage or preparing to pay the penalties.