ACA open enrollment has just begun, and people across the nation are trying to find coverage for next year. The ACA has been on everyone’s minds as people are facing premium increases that are damaging their budget. Also, it doesn’t help that large insurers have left the exchange, which leaves people uninsured until they find another coverage. That said, the ACA hasn’t received much attention for some of its other changes. These changes relate to the ACA regulations, which greatly influence small business owners and entrepreneurs. Therefore, here are some of the ACA adjustments that employers must know to keep their business running smoothly.
Say Goodbye to Good Faith and Transitional Relief
As a business owner, you’ve probably heard of the good faith waiver when it comes to ACA compliance. Good faith is when the employer tries to comply with the ACA reporting requirements but made errors in terms of filling out their information. Last year, the IRS overlooked these mistakes and didn’t punish employers for it; however, the good faith waiver will disappear for next year, so business owners will be more vulnerable to this penalty.
On top of that, the IRS Transitional Relief will change as well. Last year, the transitional relief required applicable large employers (ALE), organizations with 100 or more FTEs, to offer coverage to at least 70% of their full-time workers. Now, an organization with at least 50 FTEs are considered an ALE, and the relief requires them to offer compliant coverage to at least 95% of their full-time equivalent employees. Therefore, business owners must know if they are an ALE or not to avoid any penalties. Also, they will not be forgiven for any relief mistakes due to the disappearance of the good faith waiver.
Say Hello to New Requirements and Penalties
Without the good faith waiver and transitional relief, business owners have to thoroughly examine the ACA’s reporting requirements. Last year, the ACA form deadlines were pushed back to give employers more time to correctly submit their reports. However, for the upcoming year, the IRS will be stricter about form submissions. Hence, here are the new deadlines that business owners must record on their calendars:
- Forms 1095-B and 1095-C (given to employees) = January 31, 2017
- Forms 1094-B, 1095-B, 1094-C, and 1095-C (submitted electronically) = March 31, 2017
- Forms 1094-B, 1095-B, 1094-C, and 1095-C (submitted by paper) = February 28, 2017
The deadline changes also come with new penalties. Employers who miss the deadline or fill out the forms incorrectly will face a penalty of $260 per form, which is an increase from last year’s penalty of $250 per form. Also, the employer mandate penalty will be changing as well. Employers who don’t provide their workers with health coverage will face a $2,260 penalty for each uninsured FTE compared to the $2,160 penalty from last year. Furthermore, the penalty for having an FTE pay for their coverage that’s over 9.5% of their income will face a $3,390 fee for each FTE instead of a $3,240 fee.
These penalties can cause a business to go bankrupt, so employers must understand these ACA regulation changes. Employers should educate themselves with these adjustments to keep their business running properly. There are various ways to help entrepreneurs comply with these regulations, from partnering with a PEO/ASO or hiring an internal HR professional. Regardless, business owners should stay informed and compliant with the ACA regulations in 2017.