CPA & Business Advisory Blog

Smaller Employers Will be Impacted by ACA in 2015

The Affordable Care Act (ACA), also known as Obamacare, is effective in 2015 for employers who average 100 or more full-time equivalent (FTE) employees during 2014; employers who average 50 or more FTEs during 2015 will be subject to the ACA in 2016. The ACA forces employers to either offer affordable health coverage that provides specific benefits to employees or risk the imposition of a potentially significant excise tax.

Many employers with fewer than 100 FTEs in 2014 incorrectly believe that the ACA has no impact on them in 2015. An employer who averaged 50 or more FTEs in 2014 will need to complete IRS Forms 1094 and 1095 for the 2015 tax year. These forms advise the IRS of the type of insurance program, if any, that is being offered, and informs the employees of what has been offered to them. Employees will need the Form 1095-C to be able to complete their 2015 IRS Form 1040.

The data that is needed to complete the IRS Forms 1094 and 1095 can be voluminous. If the health program offered is fully insured, the required monthly data includes:

  • For the employer: controlled group status, the type of health program offered, monthly totals of FTEs
  • For each employee: name, Social Security number, address, whether or not coverage was offered to each employee on a monthly basis, the type of health program offered, the amount that the employee was required to pay, and why certain employees did not receive coverage

Health Insurance signIf the employer is self-insured, the names, Social Security numbers/dates of birth for each employee and dependents enrolled in the plan will also be needed.

What should employers be doing now?

All employers who determined that they weren’t subject to the ACA for 2015 must review their 2014 payroll to determine their FTEs for the 2014 year. This is a statistical calculation that is based on monthly payroll reports. The calculation can be complex, and there are different ways of measuring the number of FTEs.

All employers who will be subject to the IRS Form 1094 and 1095 reporting requirements need to set up the required method to collect the data needed to complete those forms. Employers should discuss this issue with their payroll vendors, as much of the data can be found in the payroll system; one key issue is whether the payroll vendor will prepare the IRS forms. Certain payroll vendors (Intuit, for example) have indicated that their software will not support the preparation of these forms.

Skoda Minotti can help

Our compensation and benefits consulting group can help employers with many of the issues surrounding ACA compliance including: determination of the number of FTEs that an employer has during a year; working with an employer’s payroll (whether internal or external) processor to collect the data needed for the IRS Forms 1094 and 1095; and preparing those forms. Please call us at 440-449-6800 for more information.

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