The introduction and rollout of the Affordable Care Act (ACA) has already had a significant impact on small businesses that offer health care benefits to employees. In 2014 a number of changes have come into effect that added to employers’ responsibilities. Here's an overview of recent changes and forthcoming issues related to the ACA that small-business owners should pay close attention to in the year ahead.
Employer Shared Responsibility (ESR) Final Regulations – The final regulations of the employer shared responsibility provision of the ACA were released in February 2014. While numerous changes were made, the most impactful change to business owners may have been the one-year period of transition relief. Transition relief guidelines vary according to employer size and the percentage of employees the company offers benefits to; depending on the size of the firm in question and which conditions are met, penalties and costs in connection with ESR may be reduced or waived. The U.S. Treasury published a fact sheet summarizing the final regulations to help individual businesses determine their status.
ESR Reporting Under Section 6056 Final Regulations – The IRS also released final guidance for 6056 reporting in connection with the ACA. The reporting helps the IRS determine whether a business needs to make payments in connection with ESR. It also helps determine eligibility for premium tax credits. Transition relief announced in July 2013 delayed enforcement of this reporting requirement until 2015. Voluntary reporting for 2014 is still encouraged for a smoother transition to 2015. See this fact sheet, published by the U.S. Treasury, for more.
Waiting Periods – The Departments of Labor, Treasury, and Health and Human Services (HHS) issued final regulations implementing the 90-day limit on waiting periods for health coverage. The regulations require that no group health insurance issuer impose a waiting period exceeding 90 days after an employee is otherwise eligible for coverage. In a related ruling in August 2014, the Department of Labor, the IRS, and HHS issued final regulations that permit eligibility conditions that factor in to a reasonable and bona fide orientation period that does not exceed one month.
Renewals of ACA Non-Compliant plans – Last November, insurers learned that they would be permitted to renew non-grandfathered health insurance policies in the individual and small group market that did not comply with the 2014 market reform rules for policy years beginning by October 1, 2014. Centers for Medicare & Medicaid Services issued a second bulletin in March 2014 allowing for a further extension of this transitional relief for two additional years for policies renewed prior to October 1, 2016. States do have leeway in how and if they will allow carriers in the state to apply this transition relief.
Small Business Tax Credit final rules – The Internal Revenue Service issued final regulations on the tax credit available to certain small employers offering health insurance coverage to their employees enacted under the ACA. The final regulations include guidance on the definition of eligible small employers, the calculation of full-time equivalent employees, the two-year limit on receiving the credit, the uniform percentage requirement, and filing requirements.
You don't have to navigate these regulatory changes alone. Service companies like Paychex offer a wide range of support services to help companies administer benefits plans that comply with federal regulations.