Thursday October 11, 2012

Healthcare Reform’s New Payroll Duties

Dear Valued Client:

Starting in 2014, The Affordable Care Act (ACA) states that employers with an average of 50 or more full-time employees (including part-time or seasonal employees working more than 120 days per year) must determine the full-time status of every employee each month, and report the number of full-time employees for each month to the IRS annually. Certain employers will be required to file an annual return that reports the following to the Internal Revenue Service:

• whether the company offers full-time employees and dependents the opportunity to enroll in qualified employer-sponsored plan

• length of any waiting period

• lowest cost option in each enrollment category

• employer’s share of the cost

• months during which coverage was available

• number of full-time employees for each month during the calendar year

• name, address and Taxpayer Identification Number of each full-time employee, and the month during which the employee and any dependents were covered under the plan

Additionally, an employer will be required to furnish the same information to each employee listed on the return by January 31^st each year, and include contact information. 

Although payroll reporting requirements related to the new healthcare reform do not take effect until January 1, 2014, preparing now will help employers take advantage of the "safe harbor" reporting method. In order to qualify, employers should start keeping records of employees’ full- and part-time qualifications beginning in January 2013. Employers should track all hours, by month, for which an employee works, or for which an employee is paid, including vacation, holiday, illness, disability, jury duty, etc. When the reporting requirement takes effect in 2014, the safe harbor will then allow employers to examine a three, six, nine or 12-month lookback period to make a determination of whether an employee is full (30 hours per week) or part-time (less than 30 hours per week), rather than a monthly period.

The Affordable Healthcare Act has survived a Supreme Court Decision, but uncertainty remains as to whether it will be changed or repealed after the 2012 election.

If you have any questions or concerns, please do not hesitate to contact our office.

Sincerely,

Bond & Company, PLC.

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