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Since the ACA was passed into law, employers have been required to comply with a variety of mandates that have impacted their overall bottom line. According to a recent employer survey conducted by the Society for Human Resource Management (SHRM), 33 percent of employers are predicting that some of the ACA's most costly requirements are those scheduled to take effect in 2016.

When asked what they believe to be the greatest compliance-related mandates that will financially impact their employee benefits plans in the short-term future:

• 20 percent of employers cited the 40 percent excise tax on high-cost plans (the "Cadillac Tax") slated for 2018
• 19 percent identified general administrative costs
• 13 percent anticipated costs associated with reporting, disclosure, and notification requirements

All three of these elements will require significant effort and coordination by employers to ensure administrative compliance, and some employers are even likely to incur additional costs associated with staffing, or IT infrastructure.

To ensure your organization is prepared for the latest ACA requirements and has a plan in place to mitigate costs, read our 2016 ACA frequently asked questions below:

Q: What ACA changes are coming in January 2016?

A: 2016 will bring about a new definition of a small employer, and applicable large employer (ALE) reporting and disclosure requirements.

Small employer definition
Starting in 2016, employers with 51 - 100 employees will be required to comply with the ACA's small business requirements to cover essential health benefits, set out-of-pocket limits, and remove limitations on pre-existing conditions -- effectively changing the definition of a small employer.

The anticipated requirements are expected to result in significant premium increases. According to an analysis supported by the BlueCross BlueShield Foundation, approximately 64 percent of members in groups with 51 - 100 employees may see their 2016 premiums increase by an average of 18 percent.

Employer Mandate compliance for employers with 50 - 100 employees
Starting in 2016, employers with 50 - 100 full-time employees (FT) and full-time equivalent (FTE) employees will need to comply with the ACA's requirement to offer adequate, affordable health coverage to the majority of employees and their dependent children.

The SHOP opens to employers with 100 or fewer employees
In 2016, employers with 100 or fewer FTs/FTEs will be able to utilize the Small Business Health Options Program (SHOP) to obtain lower cost group plans and to apply for tax credits.

Reporting and disclosure requirements
In 2016, groups defined as ALEs will need to complete IRS Forms 1094-C and 1095-C for the 2015 plan year. Completed 1095-C forms will need to be provided to all FTs no later than February 1, 2016, while both completed forms 1094-C and 1095-C will need to be filed with the IRS no later than February 29, 2016 if filing by mail, or March 31, 2016 if filing electronically.

The forms require employers to document monthly data at the individual employee level that includes: the total number of hours worked by each employee, his access to employer-sponsored healthcare, and any employee contributions made to employer-provided healthcare. ALEs who fail to comply with the reporting requirements, or who do not meet the established deadlines, will be required to pay financial penalties in 2016.

Q: Will I be considered a small or large employer in 2016?

A: Determining ALE status requires a calculation of FTs and FTEs.

An ALE is defined as any employer with 50 or more FTs, including FTEs, on average, during the prior calendar year. Employers determining their ALE status in 2016 will need to understand what defines an FT and an FTE and will need to calculate the average number of both on staff in 2015.

Calculating FTs and FTEs
Generally, the ACA defines an FT as any individual who is reasonably expected to work on average at least 30 hours per week, or 130 hours per month, while an FTE is constituted by two or more part-time employees whose hours total 120 in a month. It is important to note that an employer with fewer than 50 FTs could be considered a large employer if it employs a significant number of part-time employees.

Employers calculating the total number of hours worked by their employees must also understand what constitutes an hour of service. According to the IRS, in general, an hour of service means each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer, and each hour for which an employee is paid, or entitled to payment, for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence. For categories of employees for which it is inherently difficult to track hours of service, such as adjunct faculty or airline employees, until further guidance is issued, employers may use a reasonable method to determine total hours of service.

If you need help calculating your total FT, use this full-time equivalent employee calculator on healthcare.gov.

Q: I anticipate that the ACA's 2016 requirements are going to impact my plan costs. What can I do to offset increases?

A: Employers can make strategic changes to their benefits plans in order to mitigate the impact of the ACA's requirements.

1. Establish a high deductible health plan (HDHP) -- By shifting a greater portion of upfront costs for nonpreventive and routine care to members in the form of higher initial deductibles, an HDHP can help mitigate costs without reducing benefits. In addition, HDHPs offer employees lower premiums than traditional plans, which may help employers avoid the upcoming Cadillac Tax. While some employers have chosen to offer an HDHP as their only health benefit plan, others have chosen to take a phased approach, adding an HDHP as an option to their existing traditional plan design, with a long-term goal of eventually terminating any other offerings.
2. Offer consumer-driven health plans (CDHP) -- CDHPs are third-tier health insurance plans that allow members to use health savings accounts (HSAs), health reimbursement arrangements (HRAs), or other such medical payment solutions to pay for qualified healthcare expenses. When paired with an HDHP, the combination can offer significant employer cost reductions. While HRAs are employer-funded, employers and employees can fund HSAs, allowing an employer to further tailor its financial benefit strategy.
3. Implement a working spouse rule -- Some employers have been able to reduce health plan costs by approximately $5,000 per non-employee spouse per year by limiting coverage for spouses that have adequate coverage available from their own employers. The working spouse rule may be implemented in one of the following forms:
   
   
   • Spousal surcharge -- If a working spouse is eligible for coverage under his employer's plan, but elects to be a dependent under his spouse's plan, an additional surcharge would be assessed on the enrollee.
   • Mandatory enrollment -- A working spouse is required to obtain coverage through his employer's plan first and may only obtain secondary coverage from his spouse's plan.
   • Spousal carve-out -- If the working spouse is offered coverage by his employer that is equal to or better than your plan, he may not enroll as a dependent on your plan.

Q: How can staffing services help us manage the upcoming ACA requirements?

A. Your staffing partner can assist you in determining the optimal strategic workforce model to limit your employee benefits costs by ensuring that you maintain only as many full-time, permanent, benefit-eligible employees as you need.

As an added benefit, the staffing agency serves as the employer of record for its temporary and contract employees. In these cases, the staffing agency is required to determine benefits eligibility and pay for required healthcare coverage, rather than your organization.

* Disclaimer: The information included in this article is not intended to take the place of legal counsel. Employers with questions regarding their financial requirements or any tax implications should seek the advice of a qualified lawyer or accountant.

Sources:

http://www.shrm.org/hrdisciplines/benefits/articles/pages/aca-compliance-costly.aspx http://www.hrbenefitsalert.com/calculating-full-time-employees-affordable-care-act/ http://www.zanebenefits.com/blog/bid/97263/What-are-Full-time-Equivalent-Employees-FTE http://www.wellmark.com/AboutWellmark/HealthCareReform/docs/ESR_M23522.pdf http://www.irs.gov/Affordable-Care-Act/Employers/Identifying-Full-time-Employees http://www.washingtonexaminer.com/obamacare-set-to-affect-more-small-businesses-in-2016/article/2566307