Affordable Care Act changes, new tax forms will affect some businesses

 

Big changes are coming to the Affordable Care Act beginning Jan. 1, 2016. One of the most significant changes is implementation of the ACA employer mandate, which was delayed a year.

The employer mandate requires businesses with 50 or more full-time equivalent employees to provide health insurance by 2016 to at least 95 percent of their full-time employees and dependents up to age 26. If they don’t, the business can expect to pay a fee.

The mandate won’t apply to employers with less than 50 full-time equivalents.

Here are a few things you should know about employee health coverage:

  1. Employers must offer coverage, but employees don’t have to take it and the employer doesn’t owe a penalty if they don’t.
  2. Employees can’t get marketplace subsidies if their employer coverage meets affordability and minimum-value guidelines.
  3. Employees who work at least 30 hours a week or at least 130 hours a month for more than 120 days in a year are considered full-time.
  4. The annual penalty is $2,000 per employee if insurance isn’t offered by the employer.
  5. If at least one full-time employee receives a premium tax credit because coverage was unaffordable or failed to provide the minimum value, the employer must pay $3,000 for each employee receiving a credit or $2,000 for each full-time employee minus the first 30 employees – whichever is less.

There are also some new tax forms related to the ACA for the 2015 tax year. Taxpayers will still need the 1095-A form (Health Insurance Marketplace Statement) in order to file Form 8962 – the Premium Tax Credit form.

In addition, taxpayers will need form 1095-B to report and verify that the tax family had the type of qualifying health coverage required by the ACA. The insurance provider sends out this form. 

For employers who must offer health coverage to full-time employees and their dependents (businesses with at least 50 full-time workers), form 1095-C must be sent to all employees eligible for coverage to describe insurance options available to them.

For 2015, employees should receive 1095-B and 1095-C by the end of January.