The ACA (Affordable Care Act) and Payroll

The Affordable Care Act – also known as ACA, PPACA, or Obamacare – is here to stay.

According to the ACA, all American citizens must be enrolled in a health insurance plan in some form that provides Minimum Essential Coverage or pay penalties. That is how broad and wide ranging the ACA is. There is no doubt that the ACA has significantly increased employer’s administrative duties in order to meet compliance requirements. Significant data input, maintenance and reporting are required. A broad range of organizational assets consisting of Payroll, HR, ATA, Benefits, Legal and Finance management, as well as additional outside resources, must be utilized in a coordinated effort to manage all aspects. Additionally, failure to comply can be very costly. Time & Pay is ready to help ensure compliance.

Come 2016, the ACA will require employers with 50 or more full time and full time equivalent employees will be subject to the Employer Mandate. That mandate, referred to as the Shared Responsibility requirement, specifies that all Applicable Large Employers (ALE’s) offer health insurance coverage that meets both Minimal Essential Coverage (MEC) and affordability standards as defined by the ACA. (Note that in 2015, while ALE’s are being defined as employers with less than 100 full time (FT) and full time equivalents (FTE) employees, employers with 50 or more FT and FTE employees are still required to file 6055 defined reports with the IRS.)

The ACA defines a full time employee as one that “works” an average of 30 hours per week during a look-back period defined by the ACA.  The ACA notes that those worked hours include all paid hours including vacation, sick, PTO, FMLA and jury. A FTE employee is designed to take into account all part time workers. For Example, an employer who has 3 employees that average 20 hours of work per week during the defined look-back period translates into having 2 FTE employees.  (3 x 20 = 60 / 30hrs = 2 FTE’s).

ALE reporting requirements to the IRS are substantial. ALE’s must have systems in place to track data required to complete Section 6055 reporting requirements that include forms 1095 and 1094 reconciliation. These systems need to track information that includes but is not limited to:

  • HR – The source of hire dates, termination dates, re-hire dates, etc.
  • Payroll – The source of personal income data, hourly rate of pay, hours paid-worked and not worked, Safe Harbor status.
  • ATA – The source of accurately tracked hours worked for all employees by the month, absences and unpaid leave.
  • Benefits – The source of health insurance plans and the offerings of coverage and  minimum 60% actuarial value coverage

Employers will also have to work with their insurance providers to confirm their Health Plan’s specific coverage and MEC certification.

For more specific details on what information employers will need to focus on for compliance reporting, read this article.

Time & Pay is ready  to provide integrated systems that can ensure your business can comply with ACA requirements. Our Payroll and ATA systems can maintain and compile the data necessary for you to meet reporting requirements and avoid potential costly penalties.

If you are a Time & Pay customer, visit our Customer Resource Center to review a white paper containing more specific information on your requirements and how Time & Pay systems will help you comply.

As you can see, there is little doubt that the ACA has changed the way you must manage your employees, your payroll and your business. If you are not up to speed on your requirements, you need to be.  If you want to learn more about how Time & Pay can make sure your business is ready to comply, Contact Us or email our ACA team !