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Repeal of ACA Small-Group Expansion and Cadillac Tax May Happen, But Deadlines and Compliance Still Loom Large

Repeal of ACA Small-Group Expansion and Cadillac Tax May Happen, But Deadlines and Compliance Still Loom Large
Posted on Tuesday, October 13, 2015 by Businessolver Team
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On Oct. 1, the U.S. Senate passed a bill that would rescind the Affordable Care Act’s controversial expansion of the definition of a small employer, paving the way for the bill to go to President Barack Obama, who is expected to sign the bipartisan measure.

The Protecting Affordable Coverage for Employees (PACE) Act, which passed the House on Sept. 28, is hailed by the benefits industry for protecting small and mid-size businesses that they say will be harmed by the expanded definition of small employer. The bill is also supported by coalitions of employers, business groups, and organizations including the Society for Human Resource Management (SHRM), all of whom have sought to block the mandatory expansion of the small group market.

Their fear is that the expansion could lead to premium increases and jeopardize the ability for small and mid-sized businesses to compete in today’s market. Under the ACA, effective Jan. 1, 2016, the definition of a small group employer increases from 50 or fewer employees to 100 or fewer.

The new legislation would maintain the current definition of a small group market (50 or fewer employees) and give states the flexibility to expand the group size if they feel the market conditions in their state necessitate the change, according to a summary by Employee Benefit Adviser.

Meanwhile, as The Washington Times accurately defines the political landscape, “everyone from Democratic presidential front-runner Hillary Rodham Clinton to Rep. Paul Ryan, Wisconsin Republican, wants to scrap the ‘Cadillac tax’ on generous healthcare plans — a rare bipartisan push to tweak Obamacare.”

The Cadillac provision — formally the high-cost plan tax — is slated to go into effect in 2018. It’s a 40 percent excise on the cost of healthcare coverage above $10,200 for an individual and $27,500 for a family. Those amounts could change when the government issues final regulations for 2018 and as it indexes the thresholds for inflation in later years.

The prospect of a repeal is enticing some employers to hold off from making immediate changes to their current health plans, according to fresh data from the National Business Group on Health.

Yet, as much media coverage as those two pieces of the ACA is getting, the mandated submissions of forms and reports remain in place and are not likely to change. As we reported in previously on this blog, there is now no cap on the $500 penalty per required return. An ACA return – specifically, IRS Form 1095-C for employees – is required for:

  • Every employee who performs 130 or more hours of “service” (this may be different from of “work”) in any one month of a calendar year (if you’re using the monthly measurement method to determine employee eligibility for health insurance)
  • Employees who, during a look-back period, were found to be full-time (if you’re using the look-back measurement method to determine employee eligibility for health insurance)
  • Any employee who is on an employer-provided health insurance plan  even if that employee was not full-time in any month of the calendar year

And there’s no grace period for not filing. The best way to ensure you comply with the ACA and avoid IRS fines and penalties is to understand what’s expected from companies with 50 or more employees and work with a partner that has the insight and technology to ensure compliance. That includes being able to:

  • Accurately track the status of employees
  • Meet complex 6055/6056 reporting requirements
  • Ensure accurate and timely exchange notices

Want more information on ACA compliance? Check out our ACA Compliance SuiteSM or join us tomorrow for our second ACA webinar with EBN, “Get Ready for 2016: Avoid Getting Stuck in the Mud with ACA Reporting,” at 2 PM ET. We’ll be diving into your specific questions about ACA compliance and how you can ensure you don’t get stuck in the mud with ACA reporting, messy fines and penalties.