ACA is still here: What you need to know for 2019
While employers are facing little immediate change, experts say it's important to remain vigilant.
The Affordable Care Act (ACA) may face a bumpy future but for now, the law is still in effect and employers are still responsible for compliance.
That's what experts advise about the ACA (also known as Obamacare), which requires employers with 50 or more full-time employees to provide health insurance to full-time employees and their dependents. Employers who don't offer affordable health insurance options are subject to penalties.
New legislation, but little immediate change
Just a few weeks ago, as employers were preparing to distribute ACA Forms 1095-B and 1095-C to employees, a federal judge in Texas ruled the ACA unconstitutional because of a recent change in federal tax law.
While the ruling sounds dramatic, it doesn't significantly change employers' ACA responsibilities for 2019, according to Elizabeth Masson, partner at Hanson Bridgett LLP. "Right now, nothing has changed," Masson told HR Dive in an interview. When Congress passed the tax reform bill in 2017, one of its provisions basically eliminated the individual mandate for ACA, with the change scheduled to begin in 2019, Masson said. The individual mandate was a financial penalty against employees who did not enroll in healthcare. The 2017 tax law set the penalty to zero. Fast forward to this past December, when the judge in Texas ruled that if there is no penalty or individual mandate, then Congress has overreached its authority in creating the Affordable Care Act.
"The judge referred to [ACA] as a game of Jenga, where there are all these interconnected pieces," Masson said. "And as soon as you take out that individual tax, the rest of it must collapse because there is no other authority without that individual tax piece."
Although the new ruling is likely to be reviewed by the 5th U.S. Circuit Court of Appeals, and perhaps even by the U.S. Supreme Court, it is unlikely any resolution will occur in 2019, Masson said. Until something changes, employers should continue to comply with the law, she said.
Preparing for ACA 2019
Even with things operating mostly as they have before, employers can't let down their guard when it comes to ACA requirements. The experts suggested employers make special note of several provisions.
Keep up with deadlines: Companies must distribute forms 1095-C or 1095-B to employees, Masson said. The deadline for providing these forms to workers was originally Jan. 31, but the IRS extended that date to March 2.
It's important to note, however, that the date for filing with the IRS has not been extended. Companies filing electronically must complete this by April 1. Smaller companies filing using paper must complete this by Feb. 28.
Remove references to individual mandate: Check your enrollment literature to ensure references to an individual mandate have been removed for next enrollment period, Masson suggested.
Take care of underlying data collection and reports: Beyond ensuring forms are distributed and filed by the deadlines, there's still work to do to ensure your employee information is correct — an important step in reducing the risk of penalties, Arthur Tacchino, chief innovation officer for SyncStream Solutions, said in an interview with HR Dive.
To make sure filing goes smoothly, check your employee data throughout the year for accuracy. "We've had people submit, get rejected and have to submit dozens of times," Tacchino said. This process can drag on for months, he explained. When the IRS runs the company submitted data against its own database, an incorrect social security number or the incorrect coding of an employee status means the data is rejected. "You'd rather take the time before the submission and not let it drag on," he said.
It's important to review your compliance plan each year, Masson added. Whether you're tracking employees internally or through a vendor, make sure the compliance plan makes sense each year, and takes into account any changes that may have occurred in the landscape of the business, she said.
Be on the lookout for penalty letters
If the IRS believes you failed to meet shared responsibility in providing healthcare coverage, it will send you a penalty letter, called a 226-J. "The really important thing is the employer only has 30 days to respond to a 226-J letter," Masson said. Once you've responded, you get more time to show the penalty is a mistake or to provide more information. If you don't respond within the initial deadline, however, the penalty automatically goes to collections, where it is more difficult to sort out, she said.
Penalty letters can come at any time during the year, and could be for something from a previous year. What's more, it could be sent to a variety of people in your organization including the HR, benefits or legal departments.
Have a process for handling penalty letters, Tacchino said. Not only do you want to make sure the letter doesn't slip through the cracks, but you also need to inform key people in the organization about it, he added. "Maybe the HR person is the one who needs to respond to it, but a lot of financial aspects of it need to be involved," he said, adding that the penalty tax can have impact on the company's bottom line; "You don't want to be caught off guard."
Prepare for the future
One way to get a head start on new regulations that may be coming down the pike is to look at regulations proposed by the U.S. Department of Health and Human Services, Tacchino said. The information included in the Federal Register can offer some insight on how government agencies are approaching employer/employee issues, and can help you get a head start in addressing upcoming issues.
Even if the ACA isn't changing this year, there is plenty to do to keep stay compliant, according to Masson; "Just because it's not new, doesn't mean don't be vigilant."