Despite myriad legal challenges, the Affordable Care Act (“ACA”) remains the law of the land. We previously reported on the Supreme Court’s latest validation of the law in our SW Benefits Update, “Three Strikes You’re Out – The Affordable Care Act Survives a Third Legal Challenge.”
The Court’s ruling means that employers and their group health plans must continue to comply with the requirements of the ACA, including its large employer shared responsibility provisions. For employers evaluating their ACA compliance strategies, here is a short refresher:
Large Employer Shared Responsibility Payments: Large employers can be subject to penalties if any full-time employee receives a premium tax credit and either (a) the employer fails to offer minimum essential coverage (“MEC”) to 95% of its full-time employees (and their dependents) or (b) the coverage is either not affordable or does not provide minimum value. The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers.
All Employers with Self-Insured Health Plans are Required to Report MEC: All employers providing MEC are required to submit health coverage information to the IRS and to certain covered individuals for each calendar year.
Large Employers are Required to Report on Health Coverage Offered to Full-Time Employees: Applicable large employers are required to report to the IRS information regarding health coverage offered to full-time employees for each calendar year. Additionally, applicable large employers are required to provide individual statements to each full-time employee regarding the coverage offered. All applicable large employers are required to comply with these reporting requirements, regardless of whether they sponsor a self-insured, a fully insured health plan, or do not offer any health coverage to their employees.
Record Retention: The IRS has not provided specific guidance about records employers should keep to demonstrate compliance with the above requirements. Nevertheless, employers should give careful consideration to all potential records they might need to defend against penalty assessments. For more information about record retention in this context, see our SW Benefits Blog, “IRS Letters 226J: Having the Right Section 4980H Records Can Be Worth a Small Fortune.”
More information about the requirements of the ACA can be found in our SW Benefits Update, “2020 End of Year Plan Sponsor ‘To Do’ (Part 1) Health and Welfare.”