Complying with the Affordable Care ActMauldin & Jenkins | June 2015
Like many businesses in the for-profit sector, nonprofits need to ensure that they are continuing to comply with the provisions of the ACA, lest they face severe penalties.
Shared Responsibility Payments
Generally, the Affordable Care Act (ACA) requires that any employer with an average of at least 50 full-time employees (including full-time equivalents, or FTEs) must provide its employees and their dependents with qualifying health care coverage. An employer that fails to do so may incur liability for shared responsibility payments, which can be significant.
For nonprofit organizations with between 50 and 99 full-time employees, mandatory reporting requirements apply in 2015, but shared responsibility payments will not be required until 2016, provided certain conditions are met.
Nonprofits with 100 or more full-time employees must meet shared responsibility payments for the 2015 tax year and there-after. However, an exemption may be available if qualified coverage is provided to 70% of employees fn 2015 and 95% in 2016. Reporting is required. If your organization is affected, you will need to track and verify the required information.
Payment or Reimbursement of Health Expenses
Organizations that maintain health reimbursement arrangements (HRAs) should make sure their arrangements in compliance with IRS Notice 2013-54. In this notice, the IRS announced that HRAs constitute "group health plans" and are, therefore, subject to the ACA's market reform rules. Specifically, a group health plan may not impose annual dollar limits on essential health benefits and must provide certain preventive services with-out imposing cost-sharing requirements. An HRA can satisfy these rules by being sufficiently "integrated" with a group health plan under specific guidelines.
“HRAs constitute 'group health plans' and are therefore subject to the ACA’s market reform rules.”
Notice 2013-54 also addresses employer payment plans (EPPS). An EPP is any arrangement under which an employer directly pays for or reimburses an employee for all or part of the premium for the employee's individual health insurance policy. The Notice provides that employers maintaining EPPS generally will be subject to an excise tax under Internal Revenue Code Section 49801).
However, qualified "small employers" (with fewer than 50 full-time employees) are permitted to maintain EPPS through June 30, 2015, without incurring the excise tax. As of May, Congress was still attempting to determine how to resolve this issue.
Under Section 4980D, an employer that fails to meet group health plan require-ments may incur an excise tax of up to $100 per day per affected participant.
Mauldin & Jenkins, Certified Public Accountants, LLC offers a broad range of audit, tax information, return preparation, and executive board consulting services to nonprofit organizations