People Management & HR

What you need to know about ACA compliance?

  • 3 min Read
  • August 18, 2015

Author

Escalon

Table of Contents

The Affordable Care Act is likely to expand coverage for the uninsured and make the dread of ‘pre-existing’ conditions a relic of the past. However, like most things coming out of Washington, DC, it is complex and creates several new compliance requirements for businesses. 2016 is coming up, and all the grace periods will be over by then, and your businesses will be on the hook for ACA Compliance. Cost of non-compliance is hefty penalties and fines, and spending lots of time and resources with you very favorite federal agency, the IRS!

If you don’t want to spend your non-existent free time with IRS agents, here’s what you need to know:

Compliance and filing requirements are based on number of employees.

It would be so simple if that were true! It is based on having 50+ full-time employees or full-time equivalent employees (FTE). So what is a FTE? Anyone who works 30 hours per week is considered a full-time equivalent. So if you have 25 full-time employees and 50 half-time employees, you’d think that you don’t need to care about ACA Compliance? Wrong! You are deemed to employ 50 FTEs and you are required comply.

Tracking part-time employee hours becomes paramount.

So, you can’t just go by total- number of full-time employees on your payroll. If by end of the year you are at 30 employees, but during the course of the year, have employed various part-timers who add up to more than 20 FTE, you are an Applicable Large Employer (ALE).

You must offer “affordable” health insurance coverage to employees.

Providing access to “affordable” health insurance of “minimum value” is one of the core provisions of the ACA. However, what do these terms mean?

ACA defines “Affordable” Health Insurance as:

• 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.
And “Minimum Value” as:
• 60% of the total cost of an employee’s medical expenses.

Three key documents are required for compliance.

If you’re an ALE, you have to create and submit 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:
• Total headcount.
• Full-time employees.
• Whether Minimum Essential Coverage was offered.
• Whether an applicable 4980H “Safe Harbor” was used.
Deadline: February 29, 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: February 29, 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:  January 31, 2016

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Accounting & Finance

Financial Planning for the Future, Setting Long-Term Business Goals

While small businesses must handle day-to-day tasks—like managing payroll or closing monthly books—long-term planning is the compass that keeps them...

Read More
People Management & HR

Benefits Administration, What Small Business Need to Know

Benefits administration can be a game-changer for small businesses aiming to attract and retain top talent. While salaries remain an...

Read More
Accounting & Finance

AAP vs. Cash Accounting: Which Method Is Best for Your Growing Business? 

Choosing the right accounting method can significantly impact how you track financial performance, manage taxes, and plan growth. Two common...

Read More
Accounting & Finance

Beyond Bootstrapping: Advanced Cash Flow Management for Scaling Companies 

Bootstrapping—financing growth through internal cash flow—is a hallmark of many successful startups. But as businesses mature past their initial stage,...

Read More
Technology & Security

Building a Scalable Tech Stack: How to Choose the Right Tools for Growth 

In today’s business landscape, technology is more than a convenience—it’s a strategic asset that can supercharge growth. But as you...

Read More
Accounting & Finance

How to Reduce Month-End Close Time Without Sacrificing Accuracy 

The month-end close can feel like a perpetual scramble—collecting invoices, reconciling accounts, fixing last-minute errors. A drawn-out close not only...

Read More
uncategorized

How to Reduce Overhead Costs Without Impacting Productivity 

Overhead costs—from utilities and rent to administrative staffing—can quietly swell until they erode profit margins and slow your ability to...

Read More
Accounting & Finance

How to Structure Your Finance Team as Your Business Scales

Growth triggers a tidal wave of financial complexity, multi-entity operations, new product lines, overseas expansion, or investor relations. If your...

Read More
Accounting & Finance

M&A Readiness: How to Prepare Your Financials for a Successful Acquisition or Sale 

Mergers and acquisitions (M&A) can dramatically alter a company’s trajectory—unlocking new markets, technologies, or customer bases. Yet, many deals stumble...

Read More