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Understanding ACA: 5 Common Myths and Misinterpretations

The Affordable Care Act (ACA) is a complex piece of legislation. No matter your personal or political opinion of the ACA, it’s important that you – or the company handling your Benefits Administration – understands it fully and doesn’t fall victim to some of the common myths.

Below are 5 Questions and Answers that provide some clarification to common misinterpretations.

Q1: Is the maximum ACA waiting period – 90 days or 3 months? 

A: The max waiting period and the max administrative period is 90 days. Period.

Q2. Which large employers need to file a 2015 Form 1095-C/1094-C?

A: Even if an employer does not offer health benefits, they are not exempt. All employers averaging 50+ FTE during 2014 must file these forms.

Q3. What will the 2018 Cadillac Tax thresholds be?

A: As of now, we only know the 2018 placeholders are set at $10,200 single/$27,500 family. According to IRS Notice 2015-16, the actual 2018 thresholds will increase by a to-be-determined health-cost-adjustment percentage. Additional adjustments will be made based upon age/gender ratios, retiree populations and high-risk professions.

Q4: Do employers averaging between 50-99 FT + FTEs in 2014 automatically qualify for 2015 transitional relief?

A: There is not automatic qualification. In order to qualify, three requirements must be met:

Limited Workforce Size. The employer must employ on average at least 50 full-time employees (including full-time equivalents) but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014. (Employers with fewer than 50 full-time employees (including full-time equivalents) on business days during the previous year are not subject to the Employer Shared Responsibility provisions.)

Maintenance of Workforce and Aggregate Hours of Service. During the period beginning on Feb. 9, 2014 and ending on Dec. 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief.

Maintenance of Previously Offered Health Coverage.  During the period beginning on Feb. 9, 2014 and ending on Dec. 31, 2015 (or, for employers with non-calendar-year plans, ending on the last day of the 2015 plan year) the employer does not eliminate or materially reduce the health coverage, if any, it offered as of Feb. 9, 2014. (http://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act#Transition)

Q5: What is the annual 4980H(a) “no coverage” penalty and the 2015 annual 4980H(b) “inadequate/unaffordable” penalty per impacted FT employee?

A: These penalties are not set annual amounts – they accrue monthly. In calendar year 2015, they increased to $173.33 and $260.00 per month, respectively.