By Christine Moehl, Employee Benefits Attorney
Compliance with the Affordable Care Act (commonly known as the ACA or Obamacare) continues to be a challenge for many agricultural employers. Now that efforts by Senate Republicans to overturn the law have stalled, employers must prioritize compliance with the current law in order to avoid stiff penalties and fines. In fact, the IRS recently updated its website to include the 2017 “pay or play” employer penalty amounts. This strongly suggests that it plans to continue enforcement of the ACA’s employer mandate despite the Trump Administration’s contempt for the law. Below are some ACA considerations for employers in the agricultural industry:
- No-Match Notices from the IRS: Following the submission of IRS Form 1095-Cs for 2015 and 2016, many large agricultural employers have received notice from the IRS informing them that the social security numbers provided on some of the forms do not match IRS records. Employers must respond to these no-match notices in a timely manner and prove that they took reasonable steps to obtain valid SSNs in order to avoid IRS penalties. An employer will be deemed to have acted in a reasonable manner if it can prove that it took the following steps:
- Made an initial request for an employee’s SSN at the time of hire. This request must be made by 12/31 in the year that the employee is hired, or by 1/31 if the employee was hired in December;
- Made a second request for the employee’s SSN by 12/31 of the year the no-match notice was received.
Employers should have procedures in place to document these requests in order to respond to an IRS notice.
- End of Good Faith Effort Relief for Large Employer Reporting: In past years, the IRS stated that employers with incomplete or incorrect Form 1094-Cs and Form 1095-Cs would not be assessed penalties if they could demonstrate that they made a good faith effort to comply with the large employer reporting requirements under the ACA. This good faith effort relief has now expired and it is imperative that employers have procedures in place to guarantee that their 2017 forms will be 100% accurate and distributed by the deadline of January 31, 2018. Inaccurate, incomplete, or delinquent forms will be subject to a penalty of $250 per form.
- QSEHRAs for Small Employers: Prior to the ACA, health reimbursement arrangements (HRAs) allowed employers to reimburse employees for medical expenses and individual health insurance premiums on a pre-tax basis. The ACA changed the rules regarding HRAs and most employers with HRAs were forced to stop using them. However, effective January 1, 2017, new legislation called the 21st Century Cures Act created an exception the ACA prohibition on HRAs for small employers (employers with fewer than 50 full-time equivalent employees). This legislation allows small employers to set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to reimburse employees through HRAs for individual health insurance premiums, as long as the individual insurance coverage meets the “minimum essential coverage” standard. QSEHRAs must meet several strict requirements and, if it does not comply with the requirements, will subject the employer to penalties under the ACA. Despite this, QSEHRAs may give small agricultural employers a good mechanism to help employees pay for their health insurance premiums, without having to sponsor a group health plan.
If you have questions about keeping your business compliant with the changing rules and regulations under the ACA, please contact a member of the Employee Benefit Group at Saalfeld Griggs PC.