It’s been around for more than a year now, but my clients seem to be confused still about the Affordable Care Act and who it applies to. In fact, insurance is one of those things no one really likes to talk about, but everyone needs. So I want to take this opportunity to explain who the new healthcare law applies to and some news for 2016:
- APPLICABLE LARGE EMPLOYER (ALE) – The Affordable Care Act (ACA) only applies to Applicable Large Employers, also known as ALEs. The definition of an ALE is a business with 50 or more full-time employees for the current calendar year. To figure this number out, an employer should add its total number of full-time employees for each month of the previous calendar year and then divide the total number by 12. There is an exception, if an employer has fewer than 50 full-time employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year. ALEs do not have to offer part-time employees healthcare. If this is still confusing, the IRS has new information explaining ALEs and ACA. You can find more information about this at www.irs.gov.
- FULL-TIME EMPLOYEE VS. FULL-TIME EQUIVALENT EMPLOYEE – According to the IRS, a full-time employee is an employee who has an average of at least 30 hours of service per week during the calendar. The IRS says that’s different from a full-time equivalent employee. The agency says a full-time equivalent employee is a combination of non-full-time employees because they do not work more than 30 hours a week, but who, in combination, are counted as the equivalent of a full-time employee. For example, two people who work 20 hours per week equal one full-time employee.
- ANNUAL INFORMATION RETURN – Starting next year, ALEs or Applicable Large Employers will have to file an annual information return. This means you have to provide a statement of each full-time employee. It must state if the employee was offered health insurance and what insurance they were offered. Employers with 250 or more employees must file their returns electronically through the Affordable Care Act’s Information Reports System.
On November 1st, open enrollment begins. This is a good time to reach out to both your bookkeeper and your insurance agent to discuss the ins and outs of the Affordable Care Act. I like to refer my friend and insurance agent, Sebastian Banchs of John Hancock Financial Services, to companies considered ALEs.
This is also a good time to reach out to your bookkeeper to discuss impending tax issues with the healthcare law. Insurance can be a complicated thing, but if you take the time now and consult the right experts, you can remain in compliance and and up-to-date on insurance liabilities and laws.
