The Supreme Court ruled 7-2 in favor of upholding the legality of the Affordable Care Act, per their ruling on June 17, 2021. The constitutionality of the ACA law had been challenged by Texas and several other states, contending that the elimination of the individual mandate (which was not actually eliminated, but the penalty for an individual not having health insurance was set at “zero”) essentially resulted in the entire ACA law being unconstitutional. We all know that the Biden administration strongly favors keeping the Affordable Care Act, with perhaps increased enforcement and scrutiny of the employer mandate portion of the Affordable Care Act.
ALL EMPLOYERS should review whether they are subject to the ACA provisions, which generally apply to “applicable large employers” (ALE’s). AccuPay has assisted many of our employer-clients in determining if they are ALE’s, by monitoring our clients’ “FTE employee counts” in the fall of each year. HOWEVER, as we meet with prospective new employer-clients, we have found that some employers are ALE’s who are not complying with the insurance coverage requirements of the ACA OR the annual ACA reporting requirements imposed on “large employers.” The penalty structure for a “large employer” (ALE) not providing ACA compliant group health insurance OR filing annual reports with the IRS and full-time employees (the 1094 and 1095 “C” forms) is significant—-with separate IRS penalties for not offering insurance and also for not filing the annual ACA 1094/1095-C forms.
AccuPay’s previous PayDay titled “ACA–What Employers Should Know” discusses how employers can “count” their “full-time equivalent” employees (so called FTE’s) and what to do if they “measure” as an “Applicable Large Employer” (ALE). This PayDay discussed the roles of benefit consultants/brokers, payroll companies and other advisors in helping you comply with the Affordable Care Act—-SO important due to the massive penalty exposure!!
A few common misconceptions we have found in talking with employers about ACA are as follows:
- We do not have 50 full-time employees and thus are not subject to the ACA law as a “large employer”—-Employers who average 50 or more “full-time equivalent employees” (FTE’s) per month, which includes hours from part-time employees, are “large employers”—-perhaps they have 40 full-time employees (those who work 30+ hours per week) AND several part-time employees—the part-timer hours are calculated in the FTE “count” and thus MANY employers who do not have 50 full-time employees are ALE’s subject to the ACA law. It is possible to be an ALE with no full-time employees based on a large number of part-time employees who, when measured, result in 50 or more FTE’s per month
- We already provide group insurance as required by the ACA—–Providing group insurance is only 1 of the 2 primary legal obligations of ALE’s as to the ACA, with annual employee and IRS ACA reporting being the other requirement–-A “large employer” must provide annual ACA reports to employees/IRS to avoid annual ACA reporting penalties.
- Our insurance company does that for me—-Many insurance companies provide employee “B” insurance coverage forms BUT do not also prepare the “C” large employer forms required from large employers. Do not assume that your insurance company/broker is providing you with annual ACA large employer reporting services without asking them IF they are preparing and filing the ALE “C” forms. The “C” forms are much more complex than the “B” forms, since the “C” forms provide information to the IRS as to whether employers are offering “minimum essential coverage” which is “affordable” to all full-time employees-–the IRS penalty notices are based on the IRS Form 1094-C form.
- None of our companies/legal entities have 50 or more FTE’s—–IF multiple legal entities/businesses are owned by similar/same ownership groups, they often are required to measure their FTE’s as if they were a “single employer.” If you have multiple legal entities/employers owned by the same/similar individuals, you must review the “controlled group” provisions of the ACA to determine if you must treat your group as a “single employer” for ACA purposes
We encourage you to take a fresh look at your employee counts to determine IF you are an “applicable large employer” as defined by the Affordable Care Act. A good place to start is to read our July 2018 PayDay, “ACA–What Employers Should Know,” and then to ask questions of your benefits consulting firm and also your payroll specialist with AccuPay. We have been helping employers determine their status as a “large employer” under ACA provisions, for several years now, and have an ACA Team of experts at AccuPay. We have considerable experience in ACA consulting to include talking with your benefits consultant about strategies to comply with the ACA at the least cost to you. We also have experience in helping employers respond to IRS 226-J proposed penalty assessment letters, and to date have not had any client be surprised by ACA penalties.
IF YOU KNOW YOU ARE A LARGE EMPLOYER SUBJECT TO ACA ANNUAL REPORTING—–Talk to your payroll specialist at AccuPay about providing payroll information and “codings” such that we can monitor your employees’ statuses as to “full-time,” “variable hour” and “part-time” employees—–year-end ACA reporting is most efficient IF information about employee statuses is maintained/monitored during the year—–Are you “in sync” with your payroll specialist at AccuPay as to information we need to track your ACA employee statuses?
EMPLOYEE RETENTION TAX CREDITS
Are you eligible for employee retention tax credits (IRS tax credit refunds) for retro 2020 OR into 2021?—-Do you know what ERC credits are and how to calculate them? We have identified that many employers (both for and non- profit) are eligible for employee retention tax credits but are not aware of the ERC program or their eligibility for these tax credits. EVERY EMPLOYER SHOULD TAKE OUR ERC QUIZ to determine if you are eligible for the substantial tax credits for years 2020 and 2021—-most people are aware of the PPP program rules, BUT independent studies have indicated that 40% of eligible employers are not aware of the ERC credits. To date, AccuPay has claimed over $5 million, and climbing daily, ERC tax credits for our employer-clients. Take our ERC Quiz and read our ERC PayDay article which explains how the program works!!
If you have questions about ACA or ERC tax credits, talk to your payroll specialist or email Larry at larry@accupay.com
This PayDay is for educational purposes only and does not constitute tax and/or legal advice. Any links to external resources are for educational purposes only. AccuPay is not affiliated with nor receives any renumeration from any outside sources. Please consult with your tax and/or legal advisor before applying any suggestions made here or through external links.