Affordable Care Act FAQs
This post if for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. Here are some answers to frequently asked questions about ACA compliance – we hope you find this useful.
What is a full time equivalent employee?
FTE – Full Time Equivalent. A full-time equivalent employee is a conglomerate of part-time employee hours. Each bundle of 120 part-time hours worked is equal to one Full Time Equivalent. For the mathematically inclined: total PT hours ÷ 120 = number of FTEs.
What is an Applicable Large Employer?
ALE – Applicable Large Employer – A company with a FT and FTE employee total of 50 or greater. FT + FTE ≥ 50.
Are non-profits exempt from having to file?
No. All ALEs including non-profits and government agencies must file.
My company has more than one division but only one FEIN (Federal Employer Identification Number). Do we file together?
Yes. You are a single common entity in the eyes of the IRS.
Does the 2015 Transition Relief mean I don’t have to file?
No. Although coverage-related penalties for qualifying businesses with 50-99 FT employees are suspended for 2015, significant penalties for late filing or failure to file are in full effect.
Where can we purchase ACA forms?
Trainor Business & Promotions. They offer a complete line of PBS forms, including the ACA.
Are we required to use the ACA Management Software if we use PBS Payroll?
No, the ACA software is completely optional, but if your company is an Applicable Large Employer, it will save significant time and money in penalty avoidance, manual data entry, and calculations.
Are we required to file? We have 23 employees and we offer health coverage. Only a small number of employees are enrolled in our coverage, so we are planning to prepare the 1095-C manually.
Your company is not an Applicable Large Employer so you are not required to offer insurance or report ACA information to the IRS unless you are self-insured or is part of a common ownership group. Self-insured companies must report to the IRS regardless of their size.
How is an employee who opts out of health insurance participation reported in the ACA Management Software?
On line 14 of the employee’s 1095-C form, codes describe the offer made (typically 1B-1E). Line 16 codes describe reasons for no coverage—for example 2F (offer met W-2 Wage Safe Harbor Affordability). The IRS codes are entered and maintained in each employee’s ACA record in the software.
Do we need to file the ACA forms electronically?
Only if you have 250 or more forms to file. If there are fewer than 250 full-time employees over the course of the year (including turnover), electronic filing is optional. If you are part of an ALE Group, remember to count the total of all of the members.
Does the ACA system pull the insurance contribution into the ACA Management Software or must the contribution be entered separately in the ACA module?
Actual contributions cannot be used. The IRS wants to know the employee share of the cheapest qualifying employee-only coverage. This is usually different (less) than the cost of a better elective plan or one which covers dependents.
As for minimizing data entry and maintenance—while generating Employee ACA records for everyone, a contribution amount can be universally entered. Of course, it can be adjusted at the individual employee and month-to-month levels. When a year is closed, Passport creates Employee ACA records for the new year, using the December values unique to each employee. No new data entry is required unless something has changed.
How does employee turnover figure into the count of full time employees?
To determine if you are an ALE, you calculate how many FT and FTE employees you have each month, then average them for the year. If this is less than 50 you are not required to file for the following year.
For example, if you had 49 employees, lost 20 over the course of the year and replaced them with other employees you are be required to report.
On the other hand, if you are an ALE with 100 FT employees every month but 10% monthly turnover, at the end of the year you might have 210 FT employees to report for: 100 + (10 new x 11 for each month February through December). If you have 20% turnover, then it’s 100 + (20 new x 11 months) = 320. And since 320 is over 250, you are required to file electronically, even though you never had more than 100 FT employees at any one time.
So it seems to come down to how many 1095-C forms you produce?
That is correct. For electronic filing, it is about the total number of FT employees over the entire year. Determining the average is only for the purpose of determining whether or not you are an ALE (Applicable Large Employer).
We can help you simplify ACA Reporting. Learn more about our ACA Compliance Software.