How to Avoid ACA Penalties in 2015: What You Should Know About Penalty Delays
What do the most recent ACA penalty delays really mean for employers? Although you may think you’ve bought yourself some time, in reality you haven’t! Let’s cut to the chase—the IRS will be using your data from 2014 to establish your baseline, and to determine whether you are subject to the requirements effective January 1, 2015. Employers with plan years that don't start on January 1 may want to consider beginning to comply at the start of their plan year in 2014.
But how to comply? Yes, it can be confusing, however the first thing you need to do is establish measurement periods for your hourly employees. By establishing these in 2014 you’ll be in a position in 2015 (when penalties go into effect) to know where you stand. The reason being, penalties in 2015 will be predicated on looking at your data from 2014. In other words, to determine if you’re subject to a penalty, the IRS will look at your 2014 data.
In relation to measurement periods, you need to be sure that your payroll company has the capacity to provide you what you need so you can manage the process (unfortunately many payroll companies don’t). They should provide you with the total hours your employees have worked—keep in mind this is what the IRS will be looking for. The IRS will want to see how many full-time employees you have, however sometimes this is a challenge to calculate. Identifying a measurement period now will provide you with this data later.
Your Benefits Advisor should review the data with you, and help you establish the best practices for you to develop measurement periods. Your Advisor will work with your payroll company to ensure your reporting is accurate.
What’s most important in 2015 is to have a well-established measurement period. If you’d like to further discuss your situation with us, please contact Jamie Moran at firstname.lastname@example.org or 401-671-6359.
Jamie is a Principal, and leads Provider Group’s Employee Benefits Practice. He works with clients to design and implement cost effective, long-term benefits strategies, while balancing the employee’s demand for quality plans. Jamie works with businesses and non-profit organizations throughout Southern New England to develop a variety of traditional and non-traditional ways to approach employee benefits.