Myths And Facts About The ACA
The ACA has been a favored media topic for years, and people have been quick to form opinions about how it affects business. Now that large companies (those with more than 50 employees) are required to take action, it’s more important than ever to separate fact from fiction. The following three myths and facts about the ACA includes information on what businesses need to do to be compliant, how they can prepare, and who they should work with to ensure the best possible outcome.
Myth #1: Reporting Is Optional
Starting in 2015, the ACA requires businesses with more than 50 employees to report certain information related to human resources. This includes:
- The hours each employee works
- Who the full-time employees are
- Employee healthcare eligibility
- The health coverage they provide
- A list of the employees and family members enrolled in healthcare
- Amount the employer and employee pays for health care
- Eligibility for healthcare tax credits.
Myth #2: Businesses Who Don’t Offer Insurance Will Suffer Tax Penalties
Companies employing fewer than 50 workers will not experience any tax penalties related to the ACA. Businesses considered to be large may be penalized with an Employer Shared Responsibility Payment – aka “Play or Pay” penalty. More information about the exact fee calculation is available through the IRS.
Myth #3: My Business Is Exempt From Reporting Requirements
If you have fewer than 50 full-time employees, hopefully you haven’t stopped reading. The IRS has strict requirements on determining employees and whether or not you meet the definition of a small business.
As outlined by the ACA, full-time employees are those who averaged over 30 hours a week for more than 120 days in one year. The number of employees you expect will meet these parameters must also be accounted for, so it’s important for exempt companies to stay on top of this data. Businesses with more than 50 workers are required to report this information to the IRS via form 1095-C or 1094-C.
Know that some individuals shouldn’t be counted as full-time employees, including sole proprietors, partners, and shareholders. Visit HealthCare.gov for more information on these rules, or work with a payroll and human resources team to understand your obligations.
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