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Understanding the Affordable Care Act Employer Mandates

Learn about the Affordable Care Act and Employer Mandates.

A number of provisions have been enacted since the signing of the Affordable Care Act in 2010. However, none are more specific to business owners than the Employer Mandates that went into effect January 1, 2015.

What are the Employer Mandates?

Under the Affordable Care Act (also known as ObamaCare), employers with 50 or more full-time employees and equivalents are considered Applicable Large Employers (ALEs).

ALEs are required to comply with both of the following mandates:

  • Offer insurance to qualifying full-time employees and their dependents (known as the Employer Shared Responsibility Payment Mandate)
  • Report to the IRS on the insurance coverage offered (or not offered) to those qualifying full-time employees* (known as the Employer Information Reporting Mandate).
    This information is reported using Form 1094-C & Form 1095-C.

No employer with fewer than 50 full-time employees and equivalents is subject to these mandates.

Note All employers who provide self-insured health coverage, regardless of size, must file information returns for covered individuals.

Form 1094-C and Form 1095-C

The Affordable Care Act requires ALEs to file Form 1094-CTransmittal of Employer-Provided Health Insurance Offer and Coverage, with the IRS by February 28 (for paper forms) or April 1 (for e-filed forms). This form reports as a summary, the employees, and the type of coverage offered throughout the year by the ALE.

ALEs are also required to issue Form 1095-CEmployer-Provided Health Insurance Offer & Coverage, to full-time employees by January 31, 2021, to March 2, 2021. This form reports on the individual coverage offered by the ALE.

If you file 250 or more Forms 1095-B or Forms 1095-C, you must file them electronically with the IRS.

For help in understanding upcoming deadlines, review IRS instructions for Forms 1095-B and 1095-C.

Warning Because of the HR and benefits information needed to complete these forms, Intuit Payroll Services does not support either form.

Determine ALE status

As an employer, each year, you determine your ALE status for the upcoming year based on current-year employee information. For example, if you had 50 full-time employees (including full-time equivalents) in 2019, you are considered an ALE for 2020.

To determine your ALE status, you need to account for service-hours for your entire workforce (full-, and part-time employees, including seasonal employees). Generally, if you have 50 full-time employees, or a combination of full-time and part-time employees that is equivalent to 50 full-time employees, you are considered an ALE.

Determine employee status

As an employer, you are instructed to use the monthly measurement method to determine workforce size, and also to identify full-time employees who are eligible for a health care offer.

You can do so by counting the employee's hours of service for each month, across the months of the current year.

The IRS defines:

  • Hours of Service: Each hour for which an employee is paid, or entitled to payment (vacation, sick, holiday, disability, layoff, jury duty, military duty, or leave of absence)
  • Full-time employee: Any employee working an average of 30 hours or more per week for more than a 120 days in a year, or 130 hours per calendar month
  • Full-time equivalent (FTE): Any employees who are not considered full-time employees in any given month, who work less than 30 hours per week or 120 hours per month, but who, in combination, are counted as the equivalent of a full-time employee
  • Seasonal employee: Any employee who works 120 days or less during a calendar year

Seasonal workers are taken into account when determining the number of full-time employees. However, if your workforce exceeds 50 full-time employees (including full-time equivalents) for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, you are not considered an Applicable Large Employer.

Need help determining your full-time employee count? BusinessUSA.gov offers a great employee calculator to help determine your full-time employee count. You can launch it here.

How Can Intuit Payroll Services Help?

Determining who your full-time employees (and equivalents) are, is the first step to identifying your ALE status.

You can find payroll information such as employee contact information and service-hour reports from your payroll account. Select the section for your Intuit Payroll Service version and review the steps for complete details.

To run a report showing employee contact information and Social Security numbers in Intuit Online Payroll:

  1. Select the Reports tab.
  2. Under Employee Reports, select Employee Details.
  3. To save a local copy of the report, select Printer-Friendly Version or View in Excel.

To run a report showing the total service-hours for each employee by month:

  1. Select the Reports tab.
  2. Under Employee Reports, select Payroll Summary.
  3. In the Date Range fields, enter a date range that includes pay dates with pay periods spanning an entire month.
  4. Select Update Report.

The Hours column displays the total hours each employee worked in the month, including overtime hours.

For example:

If pay period 1 runs from 1/1 to 1/15, with a pay date of 1/23, and pay period 2 runs from 1/16 to 1/31, with a pay date of 2/6, to find the total service-hours the employee worked for January pay periods, use a date range of 1/23 to 2/6.

Note If your pay periods span a two month period, refer to your time tracking system for a more accurate report of hours worked.

For additional information, see What if I use Intuit Online Payroll's Time Tracking feature?

To run a report showing employee contact information and Social Security numbers:

  1. Select the Reports tab, and select All Reports.
  2. Select Manage Payroll, and select Employee Details.
  3. To save a local copy of the report, select Printer Friendly or Export to Excel from the Share drop-down menu.

To run a report showing total service-hours for each employee by month:

  1. Select the Reports tab, and select All Reports.
  2. Select Manage Payroll, and select Payroll Summary.
  3. From the Date Range drop-down menu, select Custom.
  4. Enter a date range that includes pay dates with pay periods spanning an entire month.
  5. Select Run report.

The Total Hours column displays the total service hours each employee worked in the month, including overtime hours.

For example:

If pay period 1 runs from 1/1 to 1/15, with a pay date of 1/23, and pay period 2 runs from 1/16 to 1/31, with a pay date of 2/6, to find the total service-hours the employee worked for January pay periods, use a date range of 1/23 to 2/6.

Note If your pay periods span a two month period, refer to your time tracking system for a more accurate report of hours worked.

To run a report showing employee contact information, and Social Security numbers:

  1. Select the Reports tab, and select Employee Details.
  2. Select Active, Inactive, or All Employees from the drop-down menu to specify the employees to include.
  3. Select Printer-Friendly Version and select Print to print the report, or select Adobe PDF as your printing option to save the report as a PDF.

To run a report showing total service-hours for each employee by month or a specific date range:

  1. Select the Reports tab, and select Payroll Details.
  2. In the Date Range field, select Custom.
  3. Enter a period spanning the entire month or a specific date range.
  4. Select Summary by Employee in the Employee field.
  5. Select Update Report.

The Hours column displays the total hours each employee worked in the month or date range, including overtime hours.

For example:

If pay period 1 runs from 1/1 to 1/15, with a pay date of 1/23, and pay period 2 runs from 1/16 to 1/31, with a pay date of 2/6, to find the total service-hours the employee worked for January pay periods, use a date range of 1/23 to 2/6.

Note If your pay periods span a two month period, refer to your time tracking system for a more accurate report of hours worked.

To run a QuickBooks report showing employee contact information, and Social Security numbers:

  1. Select Reports, select Employees & Payroll, and select Employee Contact List.
  2. Select Customize Report and select options on the Display tab to add additional criteria to the report.
  3. Select Ok.
  4. To print or save the report, select Print Report or Save as PDF from the File drop-down menu.

To run a report showing total service-hours for each employee by month or a specific date range:

  1. Select Reports, select Employees & Payroll, and select Payroll Summary.
  2. To run the report for a specific date range, change the dates on the report and select Refresh.
  3. In the Columns section, select Employees to filter the report to show all employees, or select Total only to display only the Totals column on the report.
  4. Select Customize Report, and use the options on the Display tab or the Filters tab to customize the report to display only specific information.
  5. To print or save the report, select Print Report or Save as PDF from the File drop-down menu.

The Hours column displays the total service-hours each employee worked in the month or date range, including overtime hours.

For example:

If pay period 1 runs from 1/1 to 1/15, with a pay date of 1/23, and pay period 2 runs from 1/16 to 1/31, with a pay date of 2/6, to find the total service-hours the employee worked for January pay periods, use a date range of 1/23 to 2/6.

Note If your pay periods span a two month period, refer to your time tracking system for a more accurate report of hours worked.

To run a QuickBooks Desktop Payroll report showing employee contact information and Social Security numbers:

  1. Select Reports, select Employees & Payroll, and select Employee Contact List.
  2. Select the Customize Report option.
  3. Select the Display tab.
  4. Select the Column options to include.
  5. Select Ok.

To run a report showing the total service-hours for each employee by month:

  1. Select Reports, select Employees & Payroll, and select Payroll Summary.
  2. From the Date Range drop-down menu, select Custom.
  3. Enter a date range that includes pay dates with pay periods spanning an entire month.
  4. To filter the report showing all employees, select Employees in the Columns section
  5. Select Ok.
  6. To print or save the report, select Print Report or Save as PDF from the File drop-down menu.

The Hours column displays the total service-hours each employee worked in the month or date range, including overtime hours.

For example:

If pay period 1 runs from 1/1 to 1/15, with a pay date of 1/23, and pay period 2 runs from 1/16 to 1/31, with a pay date of 2/6, to find the total service-hours the employee worked for January pay periods, use a date range of 1/23 to 2/6.

Note If your pay periods span a two month period, refer to your time tracking system for a more accurate report of hours worked.

Questions and answers about Employer Mandates

Check out the following sections for answers to frequently asked questions about Employer Mandates.

On January 20, 2017, President Trump signed an Executive Order that delegates authority to the Secretary of Health and Human Services and the heads of all other executive department and agencies, such as the IRS, to utilize their authority to "minimize the unwarranted economic and regulatory burdens of the Act."

So what does this mean? Executive Orders are a formal announcement, allowing the president to communicate a message across multiple executive branches. This specific Executive Order places a "freeze" on any pending legislation relating to the ACA, allowing further review by responsible agencies.

It does not however, repeal the Affordable Care Act. All mandates continue to be in effect, until further guidance is issued stating otherwise.

While the Reporting of Employer-Sponsored Health Coverage on Form W-2 is also a mandate enacted under the ACA (optional for employers who have filed fewer than 250 Form W-2s in the previous year, but required for employers who have filed more than 250 W-2s in the previous year), this mandate is not connected to the new Employer Mandates, effective January 1, 2015.

The Information Reporting Mandate requires ALEs to report insurance coverage information on Form 1094-C and Form 1095-C.

Copies of these completed forms are issued to both the eligible employee and the IRS.

The IRS requires ALEs to make health insurance offers to full-time employees and their dependents.

ALEs are not required to make offers to part-time employees or spouses or partners.

The IRS requires ALEs to make an offer to both full-time employees and their dependents.

However, you are only required to help cover the cost of the employee-only share of the premium.

Under the ACA, for an insurance offer to be qualified as affordable, qualifying employees should not pay more than 9.5% of the total income reported in box 1 on the previous year's Form W-2, divided by 12.

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