You can’t take the summer off from the ACA

4 reasons you cant take the summer offIt’s July and we are halfway through the summer; I know a lot of my clients and brokers are taking their yearly family vacations.

While you should enjoy time with your family, the end of the year will be here before you realize and unfortunately we can’t afford to take the summer off from the Affordable Care Act (ACA).

Here are 4 reasons why.

1.  IRS penalties are accruing monthly.

We commonly refer to the IRS penalty amounts as an annual amount but the penalties are actually calculated on a monthly basis. Acting sooner rather than later and getting a compliant plan in place can save employers valuable dollars on penalties that won’t have the opportunity to accrue.

2.  Exchange notices are arriving.

For every employee that logs onto the Insurance Exchange and receives a health care subsidy, a complex trail of communication and paperwork begins that requires employers to prove the status of their health care offering. If an employer has chosen to offer coverage that isn’t compliant or no coverage at all, they will have no choice but to pay the penalties.

3.  Employee eligibility is constantly changing.

Employee status can change on a daily basis, so employers can’t afford to take a break from data collection and management. Employers have to be ready for whatever comes their way – even an IRS audit. ACA requirements have become tougher in 2016, employers must now offer affordable coverage to at least 95% of their full-time employees – up from 70% in 2015. As these and other changes take place, employers have to continue to calculate benefits eligibility and affordability for required employees.

4.  Annual reporting is just around the corner.

Reporting is an annual event. But employers can’t take a break for the rest of the year, the ACA record keeping they do all year is essential for the next reporting season. This includes the information employers must provide to the IRS and their employees that demonstrates the health care coverage offered to employees meets minimum essential and affordability requirements of the ACA.

Bottom line? The ACA is complex and this year the rules are firmer than ever. Most organizations don’t have the expertise and processes to stay on top of these changes and take accurate action.

The good news is, we can help with all of these issues and more. But employers need to take the first step and not delay. Choose to benefit from our comprehensive expertise so you can look forward to smooth ACA compliance and a great rest of the year.

Farm Labor Contractors vs. Growers – 3 Steps to Compliance

The good news is that this article simplifies everything you need to know so that you can make the best decisions for your company. The bad news is that you are not going to like our answers whether you are the Farm Labor Contract (FLC) or the Grower.

The Rule: Applicable Large Employers (ALE) are required to offer affordable, minimum value insurance to their full-time employees or face penalties. An ALEs is any employer who employs more than 100 full-time and full-time equivalent employees in 2015 (more than 50 in 2016 and beyond).ALE Definition


The Problem: The only reason there is even a question here is because of one word: ‘Employer.’ And forget what you already know about this word in other areas of the law because the ACA broadened the definition. Under the ACA, the word ‘employer’ means any ‘common law’ employer. Typically, that would be the employer responsible for payroll taxes and withholdings and the one that does the hiring and firing. However, under the common law rule adopted by the ACA, the one who also controls and directs (or has the right to control and direct) the actions of employees is also considered the employer. This means that without clear guidance from the IRS or the courts, both the FLC and the Grower could be seen as the common law employer.

This is especially problematic if you are the Grower, for example, and you believe the FLC complied with the ACA with regard to the employees working for you. Let’s say you don’t find out until December 31, 2015 that your FLC offered a plan that did not comply with the ACA or that your FLC did not offer the coverage to all full-time employees. In that case, the IRS could penalize you, the Grower, for the entire year from January to December.

Alternatively, if you are the FLC, you face a different issue. You now have additional costs for your labor because you have to factor in the price of offering an ACA compliant plan. Your challenge is often how to convince the grower that the additional cost should be shared by both of you, right?

Here are the three things you need to know to protect yourself:

1. Growers may pay a fee. Growers may pay a feee

The employer mandate applies directly to the common law employer. In this situation, the Grower who is arguably also the common law employer will want to argue that the FLC’s offer of coverage satisfies the Grower’s obligations under the mandate. The only way the Grower can make such a claim is if the Grower pays a higher fee for ACA compliant labor than it would otherwise pay. The best way for a Grower to protect itself is to verify the cost of the coverage being offered and document the additional fee being paid to the FLC for such coverage.

2. Put it in writing.Put it in writing-01


A written contract is not a get out of jail free card but it will definitely help. In the contract you should specify (a) who is agreeing to offer coverage; (b) what fee is being paid by the party who plans to rely on the third party offer of coverage to satisfy their employer mandate; (c) what type of coverage is being offered and a verification that it complies with the ACA; and (d) an indemnification provision specifying who is responsible if there is an ACA violation.

3. Adopt a compliant plan.Adopt a compliant plan


Seems obvious right? It is more common that you might think than an employer believes they are complying with the ACA and finds out too late that their plan fell short. Whether you are the Grower or the FLC, you are both obligated to make sure that the plan being offered is:

  • (a) Minimum Essential Coverage;
  • (b) Affordable; and
  • (c) offering a Minimum Value Plan.

Your best bet is to adopt a plan that guarantees ACA compliance.


How to achieve a ‘penalty-free’ workplace

The New York Times recently said: After the enrollment deadline passes on Sunday, every adult without insurance will be subject to a minimum penalty of $325 when filing taxes next year. The fee will rise the following year to $695 per adult, more than seven times the $95 penalty for being uninsured in 2014.”

That story was about the individual mandate penalties, not the business penalties.

By now you probably know that large employers are facing penalties for not providing insurance, and they make the individual penalties look like a bargain. Businesses face penalties of $2000 per full-time employee, and possibly $3000 for each employee who gets an insurance subsidy on an exchange.

How to achieve a penalty-free workplaceThe Times article made it clear that the President and his team were openly pushing the fear of penalties to drive consumers to the exchanges where they can sign up for health insurance. Their goal is to have about nine million individuals enrolled in a plan. Are any of those nine million people employed by you?

If they are, then you owe a $3000 penalty if you failed to offer that person a health plan that is ‘affordable’ under the rules. You will also owe an additional $3000 for every one of your employees who takes the President’s advice and gets insured through the exchange with a subsidy.

But there’s good news. You only owe the full penalty if you fail to offer a plan for the entire year, or if you fail to offer an ‘affordable’ plan that meets the IRS’ tests for affordability.

That's not all, their are plans available that are not only affordable but offer a preventative and wellness plan and a Bronze plan at the same time. The combination creates a ‘penalty-free’ workplace allowing you and your employees peace of mind during tax season.

The preventative and wellness plan is a minimum essential coverage (MEC) plan and fulfills your employees’ requirement to have health insurance. So there’s NO penalty for your employees. But what about you, as their employer?

The offer of the Bronze plan satisfies your requirement to offer a plan. This puts you, and your employees, in the penalty-free zone. So where can you find this combination that keeps you safe?

FreedomCare offers the only guaranteed compliant program available that is low cost and easy to implement. There are thousands of employees around the country with FreedomCare cards right now, and thousands more on the way, and none of them will have their tax refund gobbled up by Uncle Sam as a penalty for not having health insurance. Not only are they penalty-free, but their employers are as well. It’s a win-win-win with FreedomCare.

Start today by making steps to create your own penalty-free workplace.