The Fines and Penalties that Could Cost You Big if You Don’t Comply with the Affordable Care Act

20 Apr

The ACA Employer Mandate can be quite costly for large businesses who fail to comply with the regulations. For example, if a company with 10,000 full-time employees in 2015 does not offer coverage to at least 7,000 of their full-time employees and their dependents (9,500 in 2016), and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace, the company could be assessed a penalty of $20 million dollars!! Yikes! Plus, even if this company failed to offer coverage to at least 70% (95% in 2016) for just one month in 2015 they could receive a penalty of $1.6 million dollars! However, there are several best practices you can implement to ensure you and your business avoids fines and penalties from the IRS.

Terms like measurement period, 30 hours per week, and minimum value are often associated with ACA compliance. Having an understanding of these is critical to complying with the regulations, but how do you practically apply them to your business? We will start by reviewing some basic applications of the ACA regulations in your day-to-day business, and cover the penalties that could be imposed for failure to comply.

Correctly classifying an employee upon hire into the correct full-time or not full-time category is important to avoid paying benefits to someone that is not truly working full-time hours. Some things to consider for classifying an employee upon hire are:

  • How are other individuals in the department in the same job classified?
  • What was the status of the person who held the job prior to this person?
  • Was the job was advertised as a full-time or a position that will offer fewer than 30 hours per week?

One of our clients had an approximate 6% increase in their benefit eligible population at the end of the 2014 measurement period. That may not sound like a lot but imagine that equated to 1,000 employees, which is a big unexpected addition to an annual medical coverage budget. To avoid this unexpected cost, make sure you correctly classify an employee at hire to help prevent surprises at open enrollment.

Some employers may decide that their solution to keep their non full-time employees from requiring an offer of coverage is to cut their hours. This is not advised unless that is a justified business reason that the nature of the position or the job itself has changed. Cutting hours just to avoid the large employer mandate can leave you exposed to lawsuits, so consult a legal advisor if you plan to reduce hours to ensure you are not going against the Department of Labor’s worker protection laws.

Forecasting tools can help prepare for increases in medical coverage costs. If you are actively tracking employee hours and able to identify trends of whom is on track to reach an average of 30 hours per week, you can anticipate those increased costs and plan ahead. The main topic with ACA regulations is the requirement to offer coverage to employees who average 30 hours or more per week, but the other side of the coin is full-time employees who are not actually working full time hours. The ability to track full-time employees to ensure they are working enough hours to remain eligible for coverage can help avoid unpleasant conversations at open enrollment. If an employee loses their medical coverage unexpectedly they may decide to look for another job instead of going on the health exchange or waiting until the next stability period.

Failure to comply with the ACA large employer mandate can result in costly fines. The IRS can impose two penalties, Penalty A and Penalty B. Penalty A is assessed if you fail to offer coverage to at least 95% of your full-time employees (70% in 2015) and their dependent children. This penalty is assessed at $2,000 per year multiplied by the total number of your full-time employee population – including those who did receive an offer of coverage. You are allowed to deduct 30 from your total full-time population that the penalty is applied to (80 in 2015), and the fine will only be assessed for the months you fail to comply at a fraction of the annual $2,000 penalty. Penalty B is assessed if the coverage you offer is not affordable and/or does not provide minimum value. This penalty can only be triggered by a full-time employee going to the insurance exchange and receiving a premium tax credit, and is applied to that employee only at $3,000 per year.

Ignoring the ACA regulations and your responsibility under the large employer mandate can result in costly fines, but preparation, policy and procedure changes and an understanding of your workforce can help ensure you are compliant.

Stay tuned for more information coming from me and Next Generation Enrollment regarding ACA compliance, tools and ideas for running your business within the confines of all of the various regulations. Should you determine that compliance is out of your reach, NGE has tools to help you.

5 Steps Large Employers Should Take to Comply with the Affordable Care Act

6 Apr

When you think of the Affordable Care Act and its requirements, do you cringe? You aren’t alone. The ACA Employer Mandate has so many confusing nuances and requirements that even the most savvy compliance and HR managers can walk away with a dizzy head.

While the ACA regulations are lengthy, wordy and frankly confusing, the basics that anyone in a position of managing ACA needs to know can be broken down into easy to digest steps. In this blog, I’ll break down the essentials of what you need to do in order to prepare to meet ACA compliance now and in the future.

Step 1: Determine if You Are an Applicable Large Employer
In 2015 you need to have 100 or more employees (full-time and full-time equivalent, or FTE) to be considered a large employer. However, that will change to just 50 employees in 2016.

Step 2: Establish Measurement Methods for Tracking Employee Hours
The IRS allows two methods: the Look-Back Method and the Monthly Method. A majority of Next Generation Enrollment’s clients are using the Look-Back Method. This approach allows you to determine a period of time where you will “look back” at an employee’s hours over that period of time to determine their average weekly hours, which then determines their eligibility for a future stability period (think of the stability period as your benefit plan year).

It sounds easy, but there are some things to keep in mind. The classification of an employee as full-time or part-time/variable hour, in addition to their hire date, will impact which measurement period they fall into and whether or not you must start measuring them in an initial measurement period. You also need to take special unpaid leave into account for the calculation, which the IRS classifies as FMLA, military leave and jury duty.

Step 3: Monitor Eligibility Changes for Coverage
New hires and employees who add more or less hours to their schedule will need to be watched carefully to determine if they are eligible for benefits, or if they lose eligibility. For example, a new hire part-time/variable hour employee that averages over 30 hours for their initial measurement period could have a shorter waiting period than a full-time new hire. A part-time/variable hour employee that averages 30 or more hours for their initial measurement period must have coverage starting no later than 13 and a fraction of a month from their hire date.

This allows time for the initial measurement period and admin period, but you must make sure the start of the initial stability period meets the 13 and a fraction of a month measurement from the employee’s hire date. Employees experiencing changes in employment classification during a measurement period could require benefits to be offered within 90 days, or that they retain their full-time benefits if they are in a stability period. Eligibility tracking is a continuous process throughout the year, not just at the end of a standard measurement period.

Step 4: Determine Treatment of Employees Who Have a Break in Service
Your business must decide how to treat employees who have a break in service of 13 weeks or more – will you treat those individuals as new hires upon their return? If you are an academic institution the break in service rule allows a longer period of time before the break in service rule would take effect. You must also decide if you will allow an employee who changes status to drop their coverage within 30-days of that change, and amend your policies to reflect that this is allowed.

Step 5: Prepare to Fulfill IRS Reporting Requirements
Finally, you want to make sure you are prepared for fulfilling the IRS Section 6055 and 6056 reporting. These require submission of a 1094-B/1095-B and/or 1094-C/1095-C, depending on the type of plan you offer, employer size and employee/non-employee status. On these forms you must report:
• Total full-time and not full-time employees by month for the year.
• If an offer of coverage was made to each full-time employee.
• If the offer was of minimum value and considered affordable.
• Who was covered under your plan and their dependents.
• Any applicable safe harbors that apply for the calendar year.

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If your head is still spinning and you want to learn more about ACA regulations, or if you want to see the ACA solutions Next Generation Enrollment has to offer, register for one of our webinars here.

 

Author: Bethany Garcia, ACA Systems and Compliance Manager 

NGE Expansion into Las Vegas!

12 Nov

ADA, MICHIGAN— October 27, 2014 — Next Generation Enrollment, a full-service benefits administration company, announced today the opening of a new call center in Las Vegas, Nevada, creating up to 50 jobs by 2016.

The call center expansion is necessary to provide support for the company’s growing member and provider services. The center will also provide language services to support information regarding enrollment, healthcare reform, benefits, billing and life event management.

“We chose Las Vegas for its talented workforce in call center expertise to ensure great service for our customers,” states Bradley Taylor, CEO of Next Generation Enrollment. “By adding this Vegas call center to our network, we will be able to better support customers in differing time zones and ensure our network has a reliable infrastructure.”

The new facility will complement its existing call center in Ada, Michigan. Both call centers help employers maximize their benefits by offering employees support while they enroll, compare plans or have any questions.

“This call center plays a critical role in helping us provide the best customer experience in the industry,” said Bradley Taylor, CEO. “We offer tailored services to ensure your plan members get the information they need about coverage and benefits to make informed decisions.”

Next Generation Enrollment takes a unique approach to benefits administration and call centers by offering tailored products and services. Each solution can be designed specifically to meet clients’ unique and complex requirements.

About Next Generation Enrollment

 Formed in 2004 and headquartered in ADA, MI, Next Generation Enrollment is a full service, boutique benefits administration company. Next Generation Enrollment provides the expertise and cutting-edge technology needed to streamline and integrate accurate benefits for employees. As a boutique administration company, Next Generation Enrollment works with you as a partner, so we can best develop solutions that work seamlessly with your business. For more information on Next Generation Enrollment, please visit www.NextGenerationEnrollment.com.

FSA Next Day Pay Service

25 Jul

After months of testing our capabilities and processing speed, we are officially launching our brand new FSA Next Day Pay service!  We’re really excited about this because we will be returning money to our participants even quicker.

The way it works is if a participant submits their entire reimbursement request through the NGE Participant Portal, receipt and all, and they do it by 3PM ET, NGE will adjudicate the claim that same day and the funds will be released the next day, with the exception of Saturday and Sunday; we expect a lot of our FSA/HRA/HSA department but we aren’t yet making them work weekends! 

Some clients have set reimbursement schedules and we will continue to adhere to those but if we are free to release reimbursements daily, then we will be cranking them out even quicker for participants choosing to utilize our new FSA Next Day Pay service!

Learn more about this new offering on the Participants page on the site.

Dependent Audit Service

22 Jul

After reviewing some recent case studies on our dependent eligibility audit service, it became very clear that the average client will generate two years worth of benefits administration service fees from one 90 day dependent audit project.  Our average client finds 6.2% of audited dependents to be ineligible and this correlates to around 2 years worth of full-service benefits administration fees. This can be an excellent funding mechanism for existing and new clients. 

3 Years Running – 101 Best Places to Work in West Michigan!

28 Mar

101 Photo

On Wednesday, March 27, NGE was excited to celebrate a third consecutive year being recognized as one of the 101 Best and Brightest Places to Work in West Michigan! NGE employees enjoyed lunch together including a delicious cake from local business “The Cake Stand.”

PIN numbers for Benefits MasterCards effective 4/1/2013

27 Feb

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into Federal Law. A component of this legislation, the “Durbin Amendment,” specifically targets the processing transactions originating from debit cards and prepaid cards, this includes HRA, FSA, and HSA benefit cards.

The changes directed by this legislation go into effect April 1, 2013 and will impact how merchants use your Benefits MasterCard.

To comply with this legislation, participants with Benefits MasterCards will now have a unique Personal Identification Number (“PIN”) associated with your current card. It is important to note that there is no need for you to obtain a new benefit card at this time, there will be no changes to your benefit plan, and you can continue to purchase eligible items at the same merchants with whom you already shop.

Important Details:
1. It is very important to note that you do not have to use a PIN. You will always have the option to use your card as a credit card and then sign your name. This will process your payment through the “Signature Network.” Your payment will then be processed just as it is today.

2. View your PIN electronically through NGE Participant Portal. Log on to your account and navigate to the Card Status page. As of 4/1/13, each benefit card associated with the account (including dependents) will now have a “View PIN” link added to the page. Clicking this link will open a new window that displays the PIN for that benefit card. You can access the WealthCare Portal through the following web address: http://www.mywealthcareonline.com/nge.

3. If you forget your PIN at the time of a sale or if you do provide the PIN but the transaction is denied, you can request that the merchant run the transaction on the “signature network.” You would then sign the receipt, as you may have done in the past with your benefit card.

4. Online Purchases – you will not need your PIN to complete online purchases of eligible items.

5. PINs are calculated and unique to your card. The PIN associated with your card cannot be modified.

6. Should you report your card as lost or stolen and NGE issues a replacement card, the replacement card will have a new number and a new PIN. Once you receive the new card you can retrieve the PIN electronically.

Remember that you do not have to use your new PIN. You should always be presented with the option to sign the receipt and not put in the PIN.

NGE will be ready to assist all Administrators and Participants with this new legislative requirement and please reach us through the online chat or by by calling us with any questions or concerns.