Employers Should Use Delay to Prepare for ACA Requirements

According to Ernst & Young, more than one-third (35%) of attendees of the webcast, “Affordable Care Act: How the Delay of the Employer Mandate May Impact Your Company,” indicated their main concern with regards to the PPACA was compliance with reporting requirements.

The delay in the reporting requirements means the reporting of covered lives by insurers and self-insured employers to the Internal Revenue Service (IRS) will not be required for 2014 health care coverage. For 2015 coverage, the earliest filing is not required until 2016. Also, reporting by large employers of coverage offered to full-time employees is not required for 2014 coverage. Again, for 2015 coverage, the earliest filing is not required till 2016.

“Companies should use 2014 to compile details such as who is full-time. Have your information prepared as if you were anticipating an audit. The delay gives companies time to get systems in place and to clean things up,” said webcast panelist Anne Phelps, a principal with Ernst & Young’s Washington Council in Washington, D.C. She said companies should use the delay as “a test or practice year to see how employees react and without fear of employer penalties in 2014.”

The employer mandate requires employers with 50 or more full-time employees to offer those employees, as well as their dependents, health care coverage or pay an excise tax if an employee obtains coverage via a health insurance exchange and premium tax credit. The delay in reporting requirements means  employer excise taxes will not be assessed till 2015.

Phelps said companies need to know "what data pieces are needed for reporting." She added, "We expect to hear more from the federal government on this topic in September, since companies will need to know specifics in order to carry out IT [information technology] builds for systems."

Communication with employees about the PPACA and related changes also needs to be made a priority, according to panelist Helen Morrison, a principal with Ernst & Young's National Tax, Compensation and Benefits area, Washington, D.C. "Employee communications are very important. Get a jump on finding out answers to questions that employees will be asking. The delay is an opportunity for employers to explain their plan to employees and also to explain how the law changes things," she said.

The webcast also made clear that communications with employees need to include information about health insurance exchanges, briefing employees on what they should expect when the exchanges open, and they start enrolling, on October 1 of this year. Discussions should also be about the Fair Labor Standards Act (FLSA) notices, which employers will need to provide to employees by that same date.

According to the Department of Labor, the FLSA notices are to notify employees of: the existence of the exchanges, including a description of the services they provide and how the exchanges can be contacted for assistance; the fact that if the employer plan's share of the total allowed costs of benefits is less than 60%, the employee may be eligible for a premium tax credit if they purchase a qualified health plan through an exchange; and that if the employee purchases a qualified health plan through an exchange, the employee may lose the employer contribution to any health benefits plan offered by the employer and that all or a portion of such a contribution may be excludable from income for federal income tax purposes.

"Companies have to communicate about the FLSA notices and how they affect employees," said webcast panelist Ali Master, national director of Ernst & Young's Business Incentives and Credits, Indirect Tax Services, Dallas, Texas.

He explained, "With the FLSA notices, if a company does not offer affordable coverage in 2014, but will do so in 2015, the employee needs to know that in advance, since they would not be able to use their 2015 tax credit for 2015 if they didn't find out in time.

Master pointed out that while the employer mandate and reporting requirement portions of the PPACA have been delayed, it is important to "remember that not all of the law is on hold."

In addition to providing employees with the FLSA notices and the availability of premium tax assistance credits for exchange coverage, several other provisions of the PPACA remain in effect, including the individual mandate (which requires employees to maintain a minimum level of coverage or pay a tax), Medicaid expansion (up to 138% of the federal poverty level), insurance market reform rules, exchange notices to employers, transitional reinsurance fees, and Patient-Centered Outcomes Research Institute (PCORI) fees.

When the panel was asked if they anticipated any legislative changes being made to the PPACA by Congress, Phelps said, "The area to really keep an eye on is the part of the law that talks about using 30 hours a week as the standard for considering an employee as full time. There is a push by employers to make this standard higher, such as 35 or 40 hours a week."