It’s wide in scope. Its regulations are difficult to understand and far-reaching. It’s the Affordable Care Act, and a big part of it potentially applies to you. That big part is the Employer Mandate, also known as “Play or Pay” or “Employer Shared Responsibility.” One blog entry is not enough space to explain the steps to comply, a task comprising an array of activities, decisions and pitfalls. Setting that aside, let’s take a look at three things SMBs need to know first about the Employer Mandate.
1) Is My Organization Subject to the Employer Mandate?
Any organization that the ACA labels as an Applicable Large Employer (ALE) is subject to the Employer Mandate. The baseline rule is this: Anyone employing, on average, a combined total of 50 or more full-time employees and Full-Time Equivalents (FTEs) in the preceding calendar year is, under original ACA regulations, an ALE. FTEs are calculated based on the aggregate hours of employees who are not full-time (e.g., part-time). Covered in the next section, exceptions apply to these ALE-related rules.
2) Which Shifting Deadlines and Requirements Apply to My Organization?
So you’re an ALE. What’s the next thing to know? Deadlines to comply with the ACA have shifted. They’ve changed from what was in the originally passed bill, and so have related requirements for the interim. Here is what you need to know:
• Compliance in 2014 is voluntary; no penalties apply.
• To be considered an ALE in 2015, the threshold number is 100 full-time employees (and FTEs). For 2016, the
number returns to 50—the threshold found in the originally passed law.
Furthermore, the Internal Revenue Service has set into place Transition Relief for 2014. Part of this means ALEs won’t be subject to any penalties associated with noncompliance with the Employer Mandate until the beginning of their 2015 plan years—i.e., not necessarily January 1, 2015. Additionally, an employer that takes steps during its 2014 plan year toward offering dependent coverage will not be subject to a “Play or Pay” penalty payment solely on account of a failure to offer coverage to dependents for plan year 2015.
3) Will the IRS Know My Organization Complied?
This falls under new information reporting without which the IRS has no way of knowing whether a company is subject to the Employer Mandate and, if so, whether that company has indeed complied. In March of this year, the IRS addressed the dilemma, issuing final rules. It’s much like W-2 reporting in that employers must furnish the information both to the IRS and employees. Requirements vary, depending on the type of organization filling.
What Does My Organization Need to Know Next?
The next thing is to learn how to comply with the Employer Mandate. It’s a complicated series of steps. Together, they demand not only your thorough understanding of them, but technology capable of handling the complex calculations part and parcel of the process. To have a fighting chance at complying with “Play or Pay,” SMBs need both.