Payroll information and the maintenance thereof is going to be critical as companies strive to understand and meet the requirements of the Affordable Care Act (ACA).
The ACA’s “play or pay” requirement, or what is formally known as the shared responsibility provision, goes into effect Jan 2014. Failure to comply can result in $2,000 to $3,000 penalties per employee. Employers with 50 full time employees including full time equivalents are subject to this provision. Part-time, temp and seasonal employees may or may not not fall under the requirements
Hours worked data is going to be essential in order to determine and ensure compliance. Full time equivalent hours worked must be tracked for 2 types of coverage. Those employees working an average of 30 hours a week during a particular period are eligible for employer provided health insurance for each month they average more than 30 hours in a work week. According to the Treasury Dept, there is an option employers can use in what is called the “stability-period approach” that includes up to a 12 month look-back period. This method is to provide some flexibility and help with the 30 hour/month rule for those employers who wish to do the required calculations on a per pay-period basis.
Payroll data will play an essential role in two of the three safe harbors that employers can use to verify that coverage is affordable for employees. One is the production of form W-2 and thus W-2 wages, although the IRS has yet to define what is to be included in ACA reportable wages. The other is the generation of reports defining an employee’s hourly rate of pay over a specific period of time.
As of Jan. 31, 2015, employers will be required to file annual health insurance coverage reports for each employee to verify compliance.
At Time &Pay, we know how essential accurate payroll information is. We are keeping up to date with ACA requirements and making sure our systems, both payroll and automated timekeeping, are ready to help ensure our clients are in compliance. While the IRS has yet to determine penalties for no, or inaccurate, reporting, many of our systems are already capable of providing the information necessary for compliance. If you would like further information on this topic, Contact our office.