Compliance 2015 Retrospective

Compliance 2015 Retrospective

If 2014 was year of preparing for The Affordable Care Act’s (ACA) “Pay-or-Play” provisions, 2015 has been the year of ACA reporting. Earlier this year, Kistler Tiffany Benefits began educating its clients regarding the new IRS Forms 1094-C/1095-C reporting requirements applicable to all employers with 50 or more full-time employees including full-time equivalents.  We held seminars, webinars, and workshops in an effort to bring clients up to speed with what they need to accomplish in order to comply.

Despite the complexities of the IRS Forms 1094-C/1095-C, our clients showed—and continue to show—an overwhelming enthusiasm to confront the challenges imposed on them via the Internal Revenue Service. As 2015 draws to an end, we are confident that our clients are well-positioned to satisfy the demands of the ACA’s reporting requirements.

This year also saw the death of the expansion of the small group market from 50-99 in Pennsylvania, New Jersey, and Delaware. Under the ACA, beginning in 2016, the small group market was scheduled expand to all employers with less than 100 employees. This would have meant that employers with less than 100 employees would have been forced to move to plans with age-banded premiums, along with other coverage mandates included in the ACA.  This would have posed major issues for employers in the 50-99 employee space with regards to “Pay-or-Play” compliance.  Specifically, in order to avoid penalty liability, “Pay-or-Play” requires employers to offer affordable/minimum value coverage to employees.  “Affordable” generally means that an employee cannot contribute more than 9.5% of his or her monthly wages towards the cost of minimum value, employee-only coverage. Since “affordability” is tied to wages, what is considered “affordable” is the same for all employees in the same pay-grade with no consideration given to employee age. If an employer with 50-99 employees was forced to move to age-banded premiums, the cost for each employee’s coverage would increase with the employee’s age; however, the “affordable” employee contribution remains static based on pay-grade. As such, the cost the employer could drastically change depending on the age of the employees. This could have opened the door to potential age discrimination issues.

In October, President Obama signed into law the PACE Act (Protecting Affordable Coverage for Employees, H.R. 1624), which deferred to the states the authority to decide whether to expand the small group market. The PACE Act essentially gave an opportunity for states to avoid the problem of age-banded premiums and “Pay-or-Play” compliance. Pennsylvania, New Jersey, and Delaware (as well as the vast majority of jurisdictions across the country) decided to keep the small group markets capped at 49 employees. As a result, it will be business as usual in the 50-99 group space for 2016.