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<span style=”font-weight: 400;”>Employers should review their <span><span itemprop=”product”>ACA</span></span> compliance processes carefully in light of new data issued by the <span><span itemprop=”name”>Kaiser Family Foundation (KFF)</span></span>. Below we’ve identified why.</span>
<h4><b>Key PTC findings</b></h4>
<span style=”font-weight: 400;”>Health exchange enrollees </span><a href=”https://www.kff.org/health-reform/state-indicator/average-monthly-advance-premium-tax-credit-aptc/?currentTimeframe=0&selectedDistributions=average-monthly-advanced-premium-tax-credit–number-of-marketplace-enrollees-receiving-advanced-premium-tax-credits–estimated-total-annual-premium-tax-credits-received-by-marketplace-enrollees&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>claimed an estimated total of 9.7 million Premium Tax Credits</span></a><span style=”font-weight: 400;”> (PTCs) throughout the 2021 tax year. This information represents over $56 billion in funds allocated to Americans in support of obtaining more affordable health coverage.</span>
<a href=”https://acatimes.com/irs-suspends-repayment-aptc-2020-tax-year” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>PTCs subsidize the cost of government-sponsored healthcare</span></a><span style=”font-weight: 400;”> and allow individuals within certain income brackets to obtain more affordable health insurance, but they’re also the </span><a href=”https://acatimes.com/avoid-these-compliance-triggers-to-minimize-aca-penalty-risk/” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>trigger</span></a><span style=”font-weight: 400;”> for the IRS identifying ACA non-compliance with the Employer Mandate.</span>
<span style=”font-weight: 400;”>Under the </span><a href=”https://trusaic.com/what-is-aca-employer-mandate/?utm_content=inbody-1″ rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>ACA’s Employer Mandate</span></a><span style=”font-weight: 400;”>, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees must:</span>
<ul>
<li style=”font-weight: 400;” aria-level=”1″><span style=”font-weight: 400;”>Offer <span><span itemprop=”name”>Minimum Essential Coverage (MEC)</span></span> to at least 95% of their full-time employees (and their dependents) whereby such coverage meets <span><span itemprop=”name”>Minimum Value (MV)</span></span>; and </span></li>
<li style=”font-weight: 400;” aria-level=”1″><span style=”font-weight: 400;”>Ensure that the coverage for the full-time employee is affordable based on one of the </span><a href=”https://acatimes.com/irs-safe-harbors-for-affordability-help-avoid-aca-penalties/” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>IRS-approved safe harbors for calculating affordability</span></a><span style=”font-weight: 400;”>.</span></li>
</ul>
<span style=”font-weight: 400;”>The IRS is able to identify non-compliance by referencing a PTC application with an individual’s <span><span itemprop=”form”>1095-C</span></span>
form, which is filed by employers annually. </span>
<span style=”font-weight: 400;”>By carefully reviewing the two, the IRS can identify if the individual received an adequate offer of health insurance from the employer and subsequently determine if the recipient was eligible for a PTC. In either scenario, the burden of proof falls on the organization for disputing claims around employees receiving PTCs.</span>
<h4><b>Why are PTC allocations increasing?</b></h4>
<span style=”font-weight: 400;”>Biden’s American Rescue Plan plays a significant role in the high turnout in PTC allocations because it </span><a href=”https://acatimes.com/new-stimulus-plan-expands-ptc-eligibility-employer-penalties” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>expanded PTC eligibility</span></a><span style=”font-weight: 400;”> for Americans with income beyond 400% of the federal poverty level. The healthcare reform also allows individuals with income at 150% of the FPL to obtain coverage for $0 monthly premiums and low-cost deductibles. </span>
<span style=”font-weight: 400;”>Needless to say, the incentive was there for individuals to obtain coverage through a state or federal health exchange.</span>
<span style=”font-weight: 400;”>In fact, Biden’s American Rescue Plan made quite the impact on the health insurance ecosystem. According to a </span><a href=”https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/10/during-week-of-anniversary-of-american-rescue-plan-biden-harris-administration-highlights-health-insurance-subsidies-that-promoted-critical-increases-in-enrollment-and-cost-savings/” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>recent statement from the White House</span></a><span style=”font-weight: 400;”>, the American Rescue Plan also: </span>
<ul>
<li style=”font-weight: 400;” aria-level=”1″><span style=”font-weight: 400;”>Increased total healthcare coverage by 21%.</span></li>
<li style=”font-weight: 400;” aria-level=”1″><span style=”font-weight: 400;”>Saved individuals over $800 throughout the year due to reduced healthcare costs.</span></li>
<li style=”font-weight: 400;” aria-level=”1″><span style=”font-weight: 400;”>Welcomed almost 6 million new Americans to ACA coverage.</span></li>
</ul>
<span style=”font-weight: 400;”>There’s no debating that the <span><span itemprop=”product”>ACA</span></span> is stronger than ever thanks to advancements coming from initiatives like the American Rescue Plan. In addition to the aforementioned items, it helped increase overall ACA coverage enrollment, which recently </span><a href=”https://acatimes.com/aca-enrollment-reaches-35-million-signups/” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>reached the historic high of 35 million</span></a><span style=”font-weight: 400;”>.</span>
<h4><b>How to prepare</b></h4>
<span style=”font-weight: 400;”>While it’s true the effects of increased PTC expansion eligibility expire at the end of this year, </span><a href=”https://www.hhs.gov/about/news/2022/03/23/12-year-anniversary-affordable-care-act-new-hhs-report-shows-ways-biden-harris-administrations-american-rescue-plan-investments-lowering-health-care-costs-expanding-coverage.html” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>Biden has communicated</span></a><span style=”font-weight: 400;”> on multiple occasions his desire to make the expansion permanent, or at the very least extended for years to come.</span>
<span style=”font-weight: 400;”>What it means for organizations is that PTC allocations will continue to go up. More employees may decline employer-sponsored healthcare coverage and opt for coverage through state and federal health exchanges. The PTC distribution may even further increase if a new <span><span itemprop=”name”>IRS</span></span> proposal that </span><a href=”https://acatimes.com/irs-proposed-ruling-could-change-aca-affordability/” rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>modifies ACA affordability</span></a> <span style=”font-weight: 400;”>becomes law.</span>
<span style=”font-weight: 400;”>Your organization needs to take precautions now to prepare for <span><span itemprop=”name”>IRS</span></span> correspondence relating to employees obtaining PTCs. If your ACA compliance processes are not buttoned up, the IRS could very well identify lapses in coverage and poor compliance with the Employer Mandate and subsequently issue the penalty </span><a href=”https://trusaic.com/what-is-letter-226j/?utm_content=inbody-2″ rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>Letter 226J</span></a><span style=”font-weight: 400;”>. </span>
<span style=”font-weight: 400;”>To prepare, consider taking the following steps:</span>
<ul>
<li style=”font-weight: 400;” aria-level=”1″><b>Implement a monthly ACA compliance process</b><span style=”font-weight: 400;”>. This process will assist in extending health coverage offers on time. Staying on top of your ACA compliance processes on a regular basis also paves the way for a smooth filing season and minimizes penalty risk.</span></li>
<li style=”font-weight: 400;” aria-level=”1″><b>Store all supporting documents digitally.</b><span style=”font-weight: 400;”> Everything from the summary of benefits, to individual offers, and methodologies for calculating ACA affordability should be saved digitally. This will assist in proving adequate offers of coverage that were made on time.</span></li>
<li style=”font-weight: 400;” aria-level=”1″><b>Partner with an expert in ACA compliance</b><span style=”font-weight: 400;”>. Truth is, managing sound ACA compliance on your own is a full-time job. Small HR professional teams struggle to meet the ever-changing and ongoing challenges associated with the ACA’s employer mandate. Choose a </span><a href=”https://trusaic.com/affordable-care-act-compliance/#product?utm_content=inbody-3″ rel=”noopener” target=”_blank”><span style=”font-weight: 400;”>vendor with a proven track record for preventing ACA penalties</span></a><span style=”font-weight: 400;”>, such as Trusaic. To date, we’ve helped prevent over $1 billion in ACA penalties for our ACA clients.</span></li>
</ul>
<span style=”font-weight: 400;”>To get a better understanding of your ACA compliance status now, get your </span><i><span style=”font-weight: 400;”>ACA Vitals </span></i><span style=”font-weight: 400;”>score below.</span>
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