3 ACA Questions Employers Need to Have Answered – Yesterday! : Question 1

Employers who have stayed on the sidelines or merely dipped a toe into ACA compliance now realize that crunch time is rapidly approaching. Large employers will have to report to the IRS about their ACA compliance in early 2016.

For employers or their advisors, there are three (3) questions that need to be answered – yesterday! These questions will determine what an employer’s obligations are and provide a compliance guide map.

This blog covers the first of these important questions.

Question 1: What size employer are you?

What size employer are you?

It’s critical for employers to understand whether they are a large employer or a small employer. In particular, it’s important to determine if an employer is an “applicable large employer” commonly referenced to as the acronym, ALE.

Why is this important? An ALE is subject to the Employer Shared Responsibility requirements – the “pay or play” provisions of the ACA. An ALE is also subject to the Employer Reporting Requirements of the ACA.

The IRS provided a handy formula for a tax forum in 2013. The presentation noted:

IRS formula

This is the simplest formula to determine ALE status. Controlled group rules, seasonal workers and veterans with TRICARE or VA benefits may impact the final sum.

It’s important to understand that an employer’s ACA employer size may – or may not – match the calculation of employer size used by an insurance company to determine available products.