Many of you may be wondering whether the GOP’s proposed ACA Replacement might end the Employer Mandate and Required Reporting for employers. The truth is that we do not know yet. What we do know is that if the newly dubbed “American Health Care Act” were to pass in some variation of its current form, there likely would not be any immediate changes in responsibilities for employers.
- The Employer Mandate
Backers of the bill say it would get rid of the penalties for the “shared responsibility” mandate. That is the rule that requires employers with 50 or more full-time and full-time equivalent employees to offer minimum essential coverage to their eligible employees. Although the employer penalties may be reduced to zero, experts believe the requirement to offer minimum-value coverage to full-time employees would remain the law of the land. Because of the Employee Retirement Income Security Act, dropping coverage could create problems for employers. Remember, employers can change their health plan coverage or options at any time, but if coverage is substantially reduced, there has to be sufficient notice given to employees.
- Individual Mandate
Currently, most individuals are required to purchase health insurance or pay a penalty. Much like the employer mandate, this mandate will remain a part of the new legislation; however, the penalty would be reduced to zero. The effective date for both mandates would apply beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
- Reporting Requirements
Since the legislation does not eliminate the employer mandate, employer reporting requirements would not change. That means the 1094/1095 reporting and employee notice requirements would remain in effect. Employers would also continue to report the total cost of employer-sponsored coverage on each employee’s W-2. The new bill requires the W-2 specify each month in which the employee was eligible for group coverage.
Takeaways
- The new legislation would reduce employer mandate penalty to zero for failure to provide minimum essential coverage
- The new legislation would reduce individual mandate penalty to zero for failure to maintain minimum essential coverage
- The new legislation creates a new continuous coverage requirement surcharge for individuals
- The new legislation delays an excise tax on high-value health care plans and leaves in place what is known as the “Cadillac tax.”
We will continue to monitor what is happening with the American Health Care Act and keep you informed. Feel free to contact a benefits specialist anytime if you have questions at 800-277-1620 Ext. 3100.
