Pub. 7 2019 Issue 4

www.uba.org 24 AFFORDABLE CARE ACT COMPLIANCE IN THE BANKING INDUSTRY T he 2010 Affordable Care Act (ACA) was designed with the po- tential to make employee health care insurance easier to obtain, at a lower cost and with expanded cover- age, but it has compliance features that can subject employers to harsh penalties. After almost 10 years since becoming law, employers are still sometimes confused or misinformed about their compliance responsibilities related to the ACA. Tonya Rule, an Eide Bailly partner, has followed the compliance requirements of the ACA since its very beginning. Tonya helps employers understand the complex- ity in ACA compliance requirements, and when they misstep in those requirements, helps them reduce or eliminate the result- ing penalties. The following Q&A with Tonya will bring you up to date on what’s happening in ACA compliance. 1. IS THERE ANYTHING ABOUT COMPLIANCE WITH THE ACA THAT IS DONE DIFFERENTLY FOR FINANCIAL INSTITUTIONS THAN FOR OTHER ORGA- NIZATIONS? No. All Applicable Large Employers (ALE), defined as employers with 50 or more full-time equivalent employees, are required to comply with the ACA. 2. IF MY FINANCIAL INSTITU- TION HAS FEWER THAN 50 EMPLOYEES, SHOULD I BE CONCERNED ABOUT THE ACA? Yes, but only if you are member of a larger “controlled” group or you are offering a self-funded plan. If a small employer does offer a self-funded plan, Form 1094-B and 1095-B must be filed with the IRS. 3. HOW IS FULL-TIME EQUIV- ALENT EMPLOYEE STATUS DETERMINED? The threshold is 120 hours for a full- time employee for ALE determina- tion. Part-time employee hours are added up, then divided by 120 to get to a full-time equivalent employee. It’s important to remember that the ALE determination is always done on the previous calendar year’s hours. If it is determined that an employer is an ALE and they make an offer of affordable and adequate insurance, that offer needs to be made to substan- tially all full-time employees to avoid the “pay or play” penalties. Once it is determined that an employer is an ALE, it’s important to remember that the hours test for subsequent years is increased to 130 hours a month. 4. WHO WITHIN AN ORGANIZA- TION THAT IS SUBJECT TO THE ACA HANDLES THE COMPLIANCE OF THE ACA? There is a misconception that insurance companies will file an entity’s ACA compliance forms. However, insurance companies only file the forms they are required to file, not the forms ALE’s are required to file. Most of the time, a client’s payroll department is tasked with ACA compliance. They need to work closely with the HR Department to manage who has been offered, has accepted or has waived healthcare coverage and whether the coverage is deemed affordable and adequate. 5. WHAT IS THE COMPLI- ANCE ISSUE THAT IS CAUSING EMPLOYERS THE MOST HEADACHES? Adequate documentation is incredi- bly important in ACA compliance. Confirming that appropriate boxes are checked, social security numbers are valid, and an insurance offer has a response is essential; these are usu- ally the biggest problem areas. The compliance burden also involves doc- umenting appropriate measurement periods and knowing your number of full-time equivalent employees. 6. WHAT GOVERNMENT AGENCY IS RESPONSIBLE FOR CHECKING A COMPA- NY’S COMPLIANCE WITH THE ACA? The Internal Revenue Service has this responsibility. 7. HOW DOES THE IRS TEST OR VERIFY COMPLIANCE WITH THE ACA? IRS employees compare information provided by an employer with infor- mation obtained from the marketplace Exchange. Discrepancies are then written up in an IRS 226J letter that is sent to employers who appear to be noncompliant. The letter can include very large penalty amounts. To reduce discrepancies, employers should be diligent about reviewing their Forms 1094-C and 1095-C before submitting them to the IRS. Just one box left unchecked can cause substantial penalties. We assist employers by reviewing their 1094/1095-C forms every year. Only 2.4% of client forms that we reviewed last year were correct, which could lead to many potential penalties being assessed down the road. By Tonya Rule