With deadlines approaching for the Employer Shared Responsibility and Individual Mandate provisions of the Affordable Care Act, business and association executives need to be aware of important details to avoid penalties and help their employees gain access to affordable health coverage.

Employer Shared Responsibility

Under the Employer Shared Responsibility (ESR) provisions of the Affordable Care Act (ACA), certain employers are required to offer affordable health insurance coverage that meets the established minimum essential coverage requirements. If you are an applicable large employer, you'll need to provide detailed informational reporting to the Internal Revenue Service (IRS) at tax time.

What You Need to Know for ESR Reporting

Applicable large employer status. In general, an applicable large employer (ALE) is any employer with an average of 50 or more full-time employees, including full-time equivalents (FTEs) during business days of the previous calendar year. A full-time employee is one who works an average of 30 hours per week or 130 hours per month. ALEs with 50 to 99 full-time employees or FTEs may qualify for relief from penalties for not offering affordable and adequate insurance to their full-time employees until 2016 if they meet certain conditions and certify in their informational reporting that they qualified for relief.

In general, ALE status for 2015 is based on workforce hours from 2014. A new employer (an employer that didn't exist in the previous calendar year) will be considered an ALE if the business reasonably expects to employ and does employ an average of 50 or more full-time employees, including FTEs, in the current calendar year.

Keep in mind, rules that determine the size of your business under health care reform are applied at the "controlled group" level, with a special standard applied to government entity employers. Generally, controlled groups are those that are tied together through direct or overlapping (common) ownership. When determining if an employer is an applicable large employer, all member entities within a controlled group or an affiliated service group (under Code Section 414(b), (c), (m), and (o)) must be aggregated.

Last, as part of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, employers should not include employees who are military veterans and have coverage through TRICARE or the Department of Veterans Affairs when determining ALE status. Once ALE status is determined, veterans are treated the same as any other employee when determining full-time status, offers of coverage, and 1095-C filing.

Offers of coverage. The ESR provisions require ALEs to have offered minimum essential coverage to at least 70 percent of full-time employees and their dependents (relief for covering dependents is available if certain conditions are met) in 2015 to avoid one of the potential penalties. In 2016, they will need to make these offers to 95 percent (or all but five) of full-time employees and their dependents. Keep in mind that the employer can be assessed another penalty for not offering coverage that meets minimum actuarial value or affordability requirements to all full-time employees if any of those employees not offered coverage receive a premium tax credit.

Minimum essential coverage. Health insurance coverage must meet the minimum benefits standard of the small- or large-group market within the state to qualify as minimum essential coverage. This includes most broad-based medical coverage typically provided by employers. It would not include certain specific coverage, such as accident or disability income, standalone dental, or vision coverage.

Minimum actuarial value. A plan must cover at least 60 percent of the cost of medical expenses to qualify as meeting the minimum actuarial value requirement.

Affordable coverage. The IRS has offered three optional safe harbor methods to help you determine this amount:

1. Form W-2 safe harbor
2. rate of pay safe harbor
3. federal poverty line safe harbor

For specifics about the three affordable safe harbors, see question 19 under "Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act" on the IRS website.

Forms to file. Organizations must file forms 1094-C and 1095-C by February 29, 2016 (or March 31, 2016, if you file electronically).

Forms to employees. In general, organizations must provide all employees with copies of form 1095-C by January 31 of the filing year. For 2016, the deadline is February 1 because January 31 falls on a Sunday. The form details what type of coverage employees were offered and for which months, as well as the cost of the least expensive employee contribution to employee-only option offering minimum essential coverage and minimum actuarial value.

Penalties. If an organization fails to offer adequate and affordable coverage to its full-time employees and their dependents per requirements of the ESR provisions of the ACA, it may face potential penalties in the form of excise taxes as high as $2,000 for every full-time employee employed during the tax year, after the first 80 in 2015  or the first 30 in 2016 and beyond. It may also face penalties for not filing accurate returns on time, starting at $50 per form up to 30 days and escalating from there.

Transition relief. ALEs of 50 to 99 employees that qualify for transition relief must still file the relevant tax forms.

Individual Mandate

In general, November marks the beginning of open enrollment, the annual period when employees enroll in a health insurance policy that best fits their needs for the following year. For those employees that are full-time and work for an ALE, some will participate in their employer's open enrollment for the group health plan. However, those employees who are not offered a group health plan or those that do not qualify for an affordable employer's plan are still required to obtain individual health insurance or pay a fee for each month that goes by without minimum essential coverage if they do not qualify for an exemption. The last day for individuals to enroll in or change plans for coverage starting on January 1, 2016, is December 15, 2015.

While employers are not obligated to assist these employees, employers can help their employees take action and gain access to health coverage. Researching and selecting health insurance options can be a daunting and time consuming task. Employers can ease this process for their employees by directing them to a private insurance marketplace. In many cases, personal marketplace providers offer tools and resources for employers to help educate their employees, share important details and deadlines, and provide access to the private marketplace.

Personal marketplaces remove the heavy lifting of searching and compiling information and instead give individuals the ability to compare benefits from a variety of national and regional insurance carriers via one centralized location. Private marketplaces also offer employees the flexibility to choose a preferred carrier and health plan that suits their needs and to receive personal recommendations, side-by-side comparison of plan options, and total annual costs associated with each plan. For employees that are not well-versed in the area of healthcare insurance, marketplaces are a convenient, comprehensible alternative that offer great results.

As important deadlines for ESR and the individual mandate are quickly approaching, now is the time for business and association leaders to make sure they do everything possible to best position their company and their employees.