Management Solutions

The Affordable Care Act (ACA) establishes that certain employers must offer health coverage to their full-time employees (FTEs) or a shared responsibility payment may apply.

1. ACA mandates employers with 50 or more FTEs offer affordable health insurance coverage.

2. ACA mandates employers with 50-99 FTEs offer health insurance coverage to FTEs in 2016.

3. ACA mandates employers with 100 or more employees offer health insurance coverage to 70 percent of their FTEs in 2015 and 95 percent starting in 2016.

a. Employers who do not comply with the law will face a penalty. Unlike employer contributions to employee premiums, the Employer Shared Responsibility Payment is not tax deductible.

i. Penalty payment under section 4980H(a) –Total number of FTEs, excluding 30 FTEs, multiplied by one-twelfth of $2,000 for each calendar month.

Example: 100 FTEs, minus the first 30, is 70 employees times $2,000, results in an annual penalty for not offering healthcare of $140,000.00.

ii. Penalty payment under section 4980H(b) - Total number of FTEs, excluding 30 FTEs, who are certified to the employer as having received an applicable premium tax credit or cost-sharing sharing reduction with respect to that employee’s purchase of health insurance for the employee on an Affordable Insurance Exchange multiplied by one-twelfth of $3,000 for each calendar month.

Example: 100 FTEs, minus the first 30, is 70 employees times $3,000, result in an annual penalty for not offering Affordable Health Insurance of $210,000.00.

4. What’s required of the Employer?

a. The health insurance that is offered to employees must meet three criteria or the employer may have to pay a penalty: Minimum Essential Coverage (MEC), Minimum Value (MV) and Affordability (Sections 5000A and 36B).

i. Minimum Essential Coverage (MEC) - The healthcare plan must cover 10 minimum essential health care services: outpatient services; emergency services; hospitalization; maternity/newborn care; mental health and substance abuse services; prescription drugs; rehabilitation (for injuries, disabilities or chronic conditions); lab services; preventive/wellness programs and chronic disease management; and pediatric services.

ii. Minimum value (MV) is defined as the minimum threshold for the value of a health plan under ACA rules and is based on the equation: MV is the cost of benefits the plan pays for a standard population divided by the total cost of benefits including the amount the plan and employee pay through cost-sharing multiplied by 100.

iii. Affordability – Employer must offer health insurance at a cost of no greater than 9.5% of the W-2 income of the lowest wage employee.

Example: If the employee earns $20,800.00 per year ($10.00 per hour), he or she cannot spend more than $1,976.00 per year or $164.67 per month to purchase the employer’s lowest cost plan.

5. 90-Day Limit on Waiting Periods (Public Health Service Act Section 2708) - Employers cannot make their new hire waiting period longer than 90 days.

6. The ACA requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD.

7. Employers are STILL required to report total number of FTEs for 2014.

Management Solutions ensures client compliance with Affordable Care Act.

Please contact us if you have any questions regarding our services: [email protected] or call 240-882-9198.

Is your company maintaining a DCAA compliant accounting system that properly aligns and tracks costs for all your government contracting work?

Management Solutions provides financial reporting, accounts receivable and accounts payable, payroll, budget and analysis and performs routine monitoring contract costs and indirect costs required by GAAP standards (Generally Accepted Accounting Practices), CAS (Cost Accounting Standards) and following the FAR (Federal Acquisition Regulation).

We can help you with the following accounting services:
1. Initial set-up of your Accounting Data File
2. Revision of your Chart of Accounts
3. Segregation of Direct Costs from Indirect Costs
4. Identification of Unallowable Costs
5. Set up Customers and Jobs
6. Set up Item List
7. Set up Payroll Item List

DCAA compliance is a serious matter. Being familiar with DCAA regulations and taking proactive measure to ensure a DCAA compliant accounting system will prevent non-compliance.