Changes brought by the Affordable Care Act (ACA) continue to roll in. For affected employers, these changes could mean higher expenses and will add filing responsibilities with the IRS.

Applicable Large Employers

An “applicable large employer,” or ALE, is defined as an employer having at least 50 full-time employees or the equivalent.

For 2015, generally only ALEs with 100 or more full-timers, or the equivalent, are subject to the shared responsibility, or “play-or-pay” provision. This requires they offer a certain level of affordable health insurance to full-time employees and their dependents at a shared cost or be at risk for penalties. But in 2016, play-or-pay will begin to apply to all employers having 50 to 99 full-timers.

As we approach 2016, many employers need to plan for some changes and new responsibilities related to the ACA. Here are two 2016 changes affecting ALEs:

Change #1: Increased Play-or-Pay Penalties

ALEs subject to play-or-pay in 2015 that don’t offer “minimum essential coverage” to 70% of full time employees may be subject to a penalty. Penalties incur if at least one full-time employee purchases health coverage individually through a state or federal health care marketplace and receives a federal premium tax credit or subsidy. For 2016, the percentage of employees that must be offered minimum essential coverage increases to 95%.

The annual per-employee penalty for ALEs that don’t offer minimum essential coverage and have at least one full-time employee receiving a tax credit or subsidy is $2,080 for 2015 and $2,160 for 2016. In 2016, an employer can exclude up to 30 full-time employees when calculating this penalty.

Employers that offer minimum essential coverage may still be subject to similar penalties if the coverage is considered unaffordable and/or doesn’t meet certain minimum value requirements and at least one full-time employee receives a premium tax credit or cost-sharing subsidy.

Change #2: Filing Forms 1094-C and 1095-C.

In 2016, ALEs — including those eligible for play-or-pay transitional relief — must file two forms with the IRS that provide information about the number of employees in 2015, whether they were enrolled in a health plan, the employees’ share of costs and much more.

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, will work like a Form W-2, with copies going to the IRS and to full-time employees.Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, will function like a Form W-3 filed by employers with the IRS.

For calendar year 2015, the forms are due by February 29, 2016 (or March 31, 2016 if filing electronically). This is the first year the forms are required.

Don’t Go it Alone

As you can see, changes are ahead. Given the complexity of ACA compliance and the potential cost for missing the mark, it’s wise to seek professional guidance. PDM’s tax experts can help advise you on the best course of action. Contact us; with our years of technical experience, advanced training, and cutting edge technology, we are your financial partner.