Yes, October brings with it plans of Halloween parties and raking the leaves. Fans of the autumn season look forward to cooler temperatures, bright colors, and the opportunity to break out those warm sweaters. But October also means getting ready for health insurance open enrollment. For most people, open enrollment starts November 1.
This is an especially stressful time of year for small business owners and payroll departments who now have to worry about Affordable Care Act (ACA) compliance. As the open enrollment period approaches, small businesses have to make sure that the healthcare coverage they are offering employees meets federal standards. If not, there could be fines to pay next year.
Some small businesses will take the previously unprecedented step of canceling employee health insurance, paying the associated fines, and directing their workers to purchase insurance on a state or federal exchange. Companies choosing to go this route will do so because paying federal fines is cheaper than absorbing rate increases.
Workers shopping for insurance on a state or federal exchange will be able to start doing so on November 1. Open enrollment for the exchanges runs through the end of January. Having said that, most states require enrollment be completed by December 15 in order to have coverage at the first of the year. Failing to enroll by that date would likely mean insurance coverage that would not be active until March 1.
As for health insurance premiums, workers participating in the exchanges should continue getting sizable subsidies to maintain affordability. But as some of the largest insurance companies start pulling out of the exchanges, rates are expected to go up. How high they go is anyone’s guess.
Complying with the ACA is now part of running a small business. So with open enrollment fast approaching, now might be time for small businesses still doing their own payroll to consider outsourcing the work. Both full-service and online payroll providers can be invaluable resources for ensuring that small business remains compliant with the ACA.
For the record, ACA compliance requires an incredible amount of detailed record-keeping. Small businesses have to prove that every qualifying employee has been provided health insurance coverage under a qualifying plan. They must document what they pay for health insurance, how much their employees pay, and from whom they purchase benefits.
Earlier this year (2016), the IRS announced that it would not aggressively seek to enforce ACA compliance for the 2015/2016 tax year as long as companies found out of compliance made an honest effort to correct things. It would be foolish to expect the same kind of treatment for 2016/2017. It’s in the best interests of small businesses to assume the IRS will go back to business as usual at the end of this tax year.
As open enrollment quickly approaches, it is clear that healthcare benefits are a source of many challenges for small businesses. But rather than get upset about something that cannot be changed, the small business owner should make every effort to make the best of things. Mandatory health insurance is here to stay unless there are systemic changes in Washington.
Be that as it may, business owners need to constantly remind themselves that ACA compliance is not voluntary. Any small business having trouble keeping up with the law should seriously consider outsourcing both their payroll and health insurance administration to a qualified payroll service provider. ACA compliance is far too important to leave to chance.