The Affordable Care Act (ACA) didn’t go into effect for all employers at the same time. Instead, the IRS provided some employers with transition relief, which delayed the onset of the law’s play-or-pay requirements and the accompanying free-rider penalties. All of this transition relief comes to an end with the 2016 plan year, which is next month for calendar year plans.
Beginning with the 2016 plan year, therefore, all applicable large employers—those with at least 50 full-time employees, including full-time equivalent employees—will be fully covered under the law. So now is the time to ensure that you’ve dotted all the i’s and crossed all the t’s on your offers of group health coverage to full-time employees.
Employers with more than 50, but fewer than 100, full-time employees, including full-time equivalent employees, during 2014 didn’t have to comply with the play-or-pay provisions during the 2015 plan year.
Warning: If this describes your company, and you get your health insurance through an insurer, you must still provide full-time employees with Forms 1095-C by Feb. 1, 2016, and file those forms, along with the transmittal, Form 1094-C, with the IRS next year.
If you’re self-insured, you must provide all employees who enroll in your self-insured coverage, including part-time employees, with forms.
Offers of coverage
For the 2015 plan year, you didn’t have to offer employees’ dependents coverage, provided you took steps to arrange for coverage beginning with the 2016 plan year and you didn’t drop any existing coverage.
For the 2015 plan year, you must offer group coverage to at least 70% of your full-time employees and their nonspouse dependents or pay a free-rider penalty. This percentage increases to 95% of your full-time employees and their nonspouse dependents, beginning with your 2016 plan year.
For the 2015 plan year, if you’re subject to the free-rider penalty for not offering group coverage at all to full-time employees, the penalty is $2,000 per employee, minus the first 80 employees. Beginning with the 2016 plan year, the penalty is calculated by excluding the first 30 full-time employees.
Relief for noncalendar year plans
If you have a noncalendar year plan, you have a little bit more time to ensure that you’re ACA compliant. These provisions won’t kick in until the beginning of your 2016 plan year, and transition relief will continue to apply to the portion of your 2015 plan year that falls within the 2016 calendar year.