ACA to Aid Millions in Obtaining Healthcare, KFF Report Finds
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The data is in, at least 27 million Americans have lost employer-sponsored health coverage as a result of COVID-19.
The Kaiser Family Foundation issued a report in late May identifying 27 million Americans as having lost their employer-sponsored healthcare. Individuals that have lost their coverage will have a number of options for obtaining new coverage, including Medicaid, the ACA Marketplace (state or federal health exchange,) employer-sponsored insurance through a dependent, COBRA, or short-term plans.
The majority of those Americans will probably obtain coverage through either Medicaid or the ACA Marketplace. That same KFF report identified 79% of Americans that lost their job due to COVID-19related factors as being “ likely eligible for subsidized coverage, either through Medicaid (12.7 million) or through the ACA’s marketplaces (8.4 million).”
Of the nearly 13 million potentially eligible for Medicaid, individuals will have a more affordable option if their home state was one of the majority to have expanded Medicaid.
To date, 37 states and the District of Columbia have expanded Medicaid. For the 14 remaining states that have not adopted the ACA’s Medicaid expansion, roughly 4.4 million uninsured nonelderly adults could become eligible for Medicaid if these states elected to expand their programs, according to a different study by the Kaiser Family Foundation.
The remaining eight million and counting will apply for a Premium Tax Credit through either a state or federal health exchange. Some of these individuals may wrongfully receive the government subsidy, as a recent TIGTA report finds. Whether they correctly receive the subsidy or not, the onus will be on employers to maintain accurate records as they gear up to file their 1094-C and employee 1095-C’s with the IRS next year.
Without detailed record keeping and an accurate ACA filing, employers could potentially expose themselves to significant ACA penalties.
As a reminder, PTCs are the trigger for the IRS issuing Letter 226J penalty notices to employers identified as having failed to comply with the ACA’s Employer Mandate for a specific tax year.
Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs) organizations with 50 or more full-time employees and full-time equivalent employees) are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is Affordable for the employee or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
If individuals wrongfully received a PTC, the burden falls on the employer to not only have their ACA practices and filing tight-nit, but to also prove to the IRS that the individual did not qualify. For those who correctly received the PTC, it is important that employers code the employee’s 1095-C correctly to prove why the PTC should not result in a corresponding penalty.
The IRS is currently issuingLetter 226J penalty notices for the 2017 tax year but should begin penalties for the 2018 tax year sometime in 2020. With employees losing coverage from their employers, penalties are likely to be on the rise as a result. Make sure your organization isn’t exposed to these penalty notices with ACA Complete.
To learn more about ACA compliance in 2020, click here.
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