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Two-month delay helping companies meet ACA tax reporting needs

A Picture of Adam Weisshouse Adam Weisshouse
01/11/2016

The Affordable Care Act (ACA) has enabled millions of people to obtain health insurance. But some sections of this law are not as popular, especially within the workplace. This is because, depending on the number of employees, companies could face substantial financial penalties for failing to provide adequate insurance coverage.

But on Dec. 28, 2015, the Treasury Department announced a two-month delay for the requirement for companies to submit tax forms to the IRS showing which employees were actually covered. The Treasury also announced a delay for another Obamacare requirement causing massive headaches in the corporate world, the employer mandate.

Businesses struggling with coverage reporting

The ACA designated 2015 as the first year that the companies affected had to track and report their employees’ insurance coverage, as well as any offers for coverage. The extensions were provided to give companies sufficient time to compile the information needed. The Treasury also wanted to give the companies’ human resources departments more support and flexibility to manage these needs.

The Treasury noted that this extension won’t affect the majority of individual taxpayers. The Treasury stated: “Like last tax filing season, most individuals will simply check a box on their tax return indicating they had health coverage for the entire year.”

Originally, this requirement was designed to assist the IRS in vetting companies and their employees. Both the reporting of coverage information and the employer mandate were also meant to help the IRS identify potential tax cheats and criminals. For instance, the IRS says that companies may try to cheat, by substituting part-time and seasonal workers for full-time employees. As such, companies with about 50 employees have the responsibility of deciding whether they are subject to the requirement rules.

But thanks to the Treasury extension, companies with more than 50 full-time and full-time equivalent (FTE) employees now have until March 31, 2016, to submit these forms. However, companies with less than 50 employees are exempt from these requirements. In addition, the Treasury delayed the requirement for companies to report this information to the IRS:

  • For paper filings, companies now have three months to report past the original Feb. 29 due date.
  • For electronic filings, companies have three months to report past the original March 31 due date.

The controversial employer mandate

The Treasury’s extension of the Obamacare employer mandate is more good news for those companies affected by the coverage reporting delay. The employer mandate was supposed to begin for companies with 50-99 employees with the official start of the ACA in Jan. 2014. But in 2013, President Obama delayed its full enforcement until 2015. Then, in 2014, he again delayed it until 2016, for those companies with fewer than 100 workers. 

The employer mandate requires companies with 50 or more full-time and FTE employees to provide health insurance for the majority of those employees. This coverage should be at least the equivalent of a bronze exchange plan for all employees working 30 hours or more each week. Of all “metal plans,” bronze plans typically have the lowest premiums, covering 60 percent of expenses. Generally, they offer the greatest savings and offer the largest tax credits.

The employer mandate is considered controversial by employers. They can be held liable for substantial fines for failing to offer sufficient coverage to employees. These fines, which are levied on a monthly basis, are calculated as:

  • For employers not providing sufficient coverage, the fine is a flat $2,000 per employee; the first 30 employees are excluded.
  • For coverage found unaffordable for the majority of employees, or if coverage doesn’t meet minimum value standards, the fine is $3,000 per full-time employee who got cost assistance. But the fine will never be more than $2,000 per full-time employee.

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