Unraveling the complexities of union plans and their relationship with the Affordable Care Act (ACA) can seem daunting. The intertwined network of obligations, responsibilities, and reporting requirements presents a labyrinth of legal language that many find hard to navigate. This article aims to untangle these intricacies, offering an overview of union plans, the ACA, their intersections, and what it all means for you and your business.
Union Plans and the ACA
The ACA was established in 2010 with three main goals:
- To increase the quality and affordability of health insurance
- To lower the uninsured rate by expanding both public and private insurance coverage
- To reduce the costs of healthcare for individuals and the government
On the other hand, union plans, also recognized as multiemployer plans, embody a deep-seated practice of collaborative agreements among numerous employers. These employers are generally engaged in the same or interrelated industries. These well-established arrangements are a testament to years of cooperation aimed at securing consistent healthcare coverage for their workforce, regardless of job transitions within the industry.
These strategic agreements, which have been operational for numerous years, play an indispensable role in maintaining healthcare coverage for employees. This coverage remains constant whether an employee transitions between jobs in the same industry or during episodes of joblessness.
When the ACA came into existence, it presented several implications for union plans. For instance, unions had to navigate the changes introduced by the ACA, such as the prohibition on pre-existing condition exclusions, annual and lifetime coverage limits, and the requirement to provide coverage for dependents up to age 26.
Reporting Requirements under ACA
The ACA’s reporting requirements aim to ensure transparency and adherence to its coverage provisions. Employers, health insurance providers, and other entities that provide minimum essential coverage are required to report health insurance coverage information to the IRS and to the individuals they cover.
The most prominent among these are the IRS Section 6055 and 6056 reporting. Section 6055 requires providers of minimum essential coverage to report certain information about the coverage and covered individuals. Section 6056 requires Applicable Large Employers (ALEs) to report information about the coverage they offered to full-time employees, if any.
It’s crucial to note that union plans must comply with these reporting requirements as providers of minimum essential coverage. This means that they must provide detailed monthly reports about the coverage, including who was covered, the duration of the coverage, and other related information.
A related aspect of the ACA is the Employer Mandate, also known as the Employer Shared Responsibility Provision (ESRP). This refers to the requirement that ALEs must offer health insurance that is affordable and provides minimum value to at least 95% of their full-time employees and their dependents. There are penalties for noncompliance, so it’s important that employers are diligent in staying on top of these requirements.
Understanding Key Definitions
For those uninitiated in the language of the ACA, the sheer volume of definitions can seem overwhelming. Here are a few crucial ones:
- Applicable Large Employer (ALE) – Employers that have 50 or more full-time and full-time equivalent employees are considered ALEs.
- Full-Time Employee – For ACA purposes, an employee is considered full-time if they have 130 hours of service in a month.
- Minimum Essential Coverage (MEC) – Various types of plans qualify as MEC: Marketplace plans, job-based plans, Medicare, Medicaid, and Chip.
- Affordability – A health insurance coverage offer is considered affordable if the employee contributions for self-only coverage does not exceed 9.5% (adjusted annually) of the employee’s household income.
While the interplay between union plans and the ACA is complex, understanding how they interact and the reporting requirements involved can help employers, union members, and other stakeholders navigate the healthcare landscape more confidently. Staying informed and getting help from experts can make a significant difference in maintaining compliance. Learn more about ACA filing and ensure you’re tax-compliant!
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.