ACA Externalities to Employers

February 9, 2021

  The Affordable Care Act (ACA) signaled the biggest change in health insurance policy in 20 years and inevitably had big impacts on the employers it targeted. In the eyes of many people the law seems to be an issue that would mainly impact HR and employee benefits. However, the externalities that have arisen prove that the influence of the law spans much further.  The Federal Mandate for large employers to provide healthcare insurance meeting a minimum essential coverage threshold introduces a new spectrum of compliance and penalties. The possible financial impact now makes this an HR benefits adjustment and a CFO’s issue because of how much this change in responsibility can cost them. An Applicable Large Employer (ALE) must now offer minimum essential coverage (MEC) to 95% of its employees or pay a penalty of $ 2,000 – $3,000 per year per employee.  The result is a drastic change in how much some employers are currently paying out for benefits.  Yet, this change will not impact 100% of applicable large employers since some are already providing MEC to 95% of their employees. The industries that this will definitely impact will be the service industries which have models that utilize high number of personnel. These industries characteristically have a large number of lower wage employees teetering on the part time/full time scale. If they now have to pay for all their workers who reach the full time equivalent (FTE)— 30 hours per week or 130 hours per month— they could end up paying 200-400% more to provide benefits that comply with the Affordable Care Act. This impact is reaching much more than just restaurant workers.  In public school districts we witness cutting of hours for paraprofessional workers (janitors, substitute teachers, food service workers etc.) from 30 to 27.5 hours per week (KTVB).  This is obviously a consequence of ACA’s impact on an organization’s bottom line. This particular district estimated that it would cost them approximately 7,000 per employee or 1 million per year if they had to offer them fulltime benefits.  It is a difficult decision but, organizations feel their hands are being forced by the need to make ends meet. Atop of these new obligations is the requirement to report and file a wealth of information to the IRS and distribute statements to employees.  Employers will be required to perform variable hour tracking to determine eligibility, collect and store coverage data for each month, report on employee’s dependents coverage and print/mail/e-file all of this data in compliance.  Many organizations are scrambling to understand what is needed, how-to and what-if they report or do not report. In addition, the instructions for the 1095 forms series are so complex it can look like complete Greek to non-tax professional.  TSC1099, our convenient application, has introduced 1095 reporting and compliance into its supported forms library. To find a way to ease the additional burden of dealing with these new reporting requirements call a Tab Service Company representative today (312)-527-4306. Tab Service Company is a service bureau company that offers ACA compliance services for section 6055 reporting. Established in 1960 the company has provided organizations and businesses across the nation with Business Process Outsourcing solutions.  We approach the section 6056 reporting and compliance from a holistic standpoint to include: tax consulting, data collection, electronic presentment and print/mailing/electronic filing.  Call today to speak to a representative (312) 527-4306.