Even today many people in America do not have access to adequate healthcare insurance. Successive governments at the federal and state level have been taking necessary steps to tackle this problem head on. The enactment of the Affordable Care Act in Senate and House of Representative is an outcome of their endeavor. Under the Act, business owners employing 50 or more employees need to comply with certain specific guidelines. They need to provide necessary healthcare coverage to such staff members who work for more than 30 hours every week. Moreover, they need to file certain reports with Internal Revenue Service (IRS). Such reports should contain information the number of hours such employees work and amount these businessmen spend on their healthcare.
ACA Reporting – What entrepreneurs and business owners need to know?
Experts specializing in this field say business owners employing 50 workers in their establishments need report to IRS. They need to provide necessary information on employees working more than 30 hours every week. In some case, they also need to supply relevant data on those who work for an aggregate of 130 hours per month. They have to remember that the kind of healthcare coverage they provide their employees will have tax implications. This is why they need to keep in mind following 4 important points of this new Act:
Whether business organization falls under the category of ALE
If an entrepreneur employs more than 50 full-time workers, his/her organization falls under the category of ‘applicable large employer’ or ALE. As per the new ACA reporting guidelines, he/she are under the obligation to provide adequate healthcare to 95% of such employees. This will entitle them to premium tax credit on the amount they spend for this purpose. For this, they have to submit relevant detail in Form 1094 and 1095.
The coverage such an organization provides to its employees
The type of healthcare coverage they provide to their employees should fall under the category of ‘affordable’. Such business owners have to bear 60% or more of this insurance expense. However, they should not allow such workers to pay more than 9.5% of their annual income. To help such entrepreneurs determine their workers’ household earnings, the IRS lays down specific guidelines.
Such healthcare coverage is not for dependents of the employees
Entrepreneurs and other businessmen should not that the healthcare coverage they provide is only for their workers. It is not for their spouse or other dependents.
Cash allowance to employees to buy insurance policies is prohibited
Some entrepreneurs provide cash to their employees to buy healthcare insurance policies of their choice. This is known as ‘Health Reimbursement Arrangement’ or ‘Employer Payment Plan (EPP)’. Such businessmen will be liable to fines if they continue this policy.
The Affordable Care Act benefits both employers and employees. However, under the new ACA reporting guidelines, entrepreneurs need to disclose relevant information to IRS. This allows them to avail certain tax credits and exemptions. However, when they fail to do so, they are liable to fines.
