Annual Compliance Requirements

Certain calculations and determinations must be performed annually to ensure that your company and its benefits offerings comply with laws and regulations.

1. Determination of Applicable Large Employer (ALE) Status for Employer Mandate: Employers with an average of 50 or more full-time equivalent employees in the previous year are considered ALEs under the ACA.
2. Affordability Calculation for ALEs: ALEs are required to ensure that their health coverage is affordable and meets minimum value standards to avoid potential penalties.
3. Determination of Full-Time or Part-Time Status for Variable Hour Employees: Employers must identify full-time employees for purposes of ACA compliance using a measurement and stability period methodology.

Employers are responsible for both distributing certain employee notices and submitting reports to government agencies such as the IRS, the Department of Labor (DOL), and the Centers for Medicare and Medicaid Services (CMS). These requirements help ensure transparency and regulatory compliance.

1. Medicare Part D Creditable Coverage Notice (for employees and dependents): This notice informs employees whether their prescription drug coverage is expected to pay, on average, as much as the standard Medicare prescription drug coverage.
2. Medicare Part D Creditable Coverage Report (to CMS): Employers who provide prescription drug coverage are required to disclose annually to CMS whether the coverage is creditable.
3. IRS Form 1094/1095 for ACA Reporting: These forms are used to report information about offers of health coverage and enrollment in health coverage for employees.
4. W-2 Reporting of Employee Benefits Value: Employers that issue 250 or more W-2s for the year are required to include the cost of group health coverage on their employees’ W-2 Wage and Tax Statements.
5. Form 5500 (for health and welfare plans with 100+ participants): This form provides information about the plan’s financial conditions, investments, and operations.
6. EEO-1 Report (for companies with 100+ employees): This form collects data about the number of individuals employed, their distribution by legal job category, and information about their sex and race/ethnicity.
7. Additional IRS Forms: Depending on your circumstances or location, forms like 1099-HC, 8962, or 8965 may be required to report on coverage and premium tax credits.
8. SBC Monitoring: Some insurance carriers require confirmation that Summary of Benefits and Coverage (SBC) documents were distributed and ask employers to report how they were delivered.
9. Medicare Secondary Payer (MSP) Status Update: Some insurance carriers may request annual confirmation or updates on your MSP status. This process helps to ensure correct coordination of benefits. As an employer, you’re required to provide accurate information when requested.
10. Prescription Drug Data Collection (RxDC Reporting): Employers must report the average monthly premium they pay and employees pay for health insurance benefits to CMS. Some carriers may assist in collecting this information and submitting it if the employer meets the reporting deadline.