By - June 23, 2016

ACA Reporting for Union Employers

Union employee

It’s well known that operating in compliance with the Affordable Care Act (ACA), including reporting, can be a challenging undertaking for any company. For employers with unionized employees, the laws governing union healthcare coverage are just as complex as the rest of the ACA regulations: unions and employers alike are subject to compliance and reporting requirements for offering legally adequate levels of healthcare coverage.

Determining company size for ACA reporting purposes

In terms of operating within ACA reporting regulations, union employers are subject to the same requirements as any other company; namely, that all eligible full-time employees must be offered a health care plan under the law. The legal status of an employer’s size is determined the number of full-time employees at the company, and any employee who works an average of 30 hours a week is considered to be full-time. Under the law, companies with 50 or more full-time employees are deemed Applicable Large Employers (ALEs); this distinction makes certain aspects of the ACA compulsory for designated companies.

Self-insured vs. fully-insured

Under the ACA reporting regulations, ALEs are obligated to annually report certain figures about their health care benefits to the IRS. Employers who are self-insured, meaning they are directly responsible for paying the claim dollars for their sponsored plans, are technically the insurer and thus bear the responsibility of both the 6055 and 6056 codes.

Meanwhile, employers who are fully-insured rely on the insurance company to pay the claim dollars for their offered plans, and the employer is responsible for the 6056 (large employer mandate) reporting.

ACA reporting for employer self-insured coverage vs. union sponsored plan

While negotiations with unions can set the type of coverage and employee cost of plans, many employers still sponsor and self-insure the coverage offered to union employees. In these situations, the ACA reporting requirements will not differ widely from non-union employees.

When benefits are administered by the union (or a third party to the union), ACA compliance becomes incredibly difficult. In these cases, the employer does not have access to compliance information such as data on the eligibility rules of the union, details of the benefits plan, confirmation that the plan offers Minimum Value and Minimum Essential Coverage, coverage for the union employee’s dependents, or details on enrollees by plan. Union sponsored plans have not been required to provide disclosures to the employer.

Yet no matter how challenging, the employer still carries the burden for compliance. This means the determination of eligibility for full-time employees is still required, and reporting must be made to the employee and the IRS, just as for non-union employees.

Typically, employers track hours for their union employees and can easily calculate who is considered full time or part time based on ACA measurement periods. The real challenge is gaining insight into the plan itself. Does the union allow you to know whether the plan meets Minimum Value and Minimum Essential Coverage requirements? Will they tell you whether the plan allows spouses and dependents to enroll? Does the union follow appropriate eligibility requirements that comply with ACA?

For employers who have less-than-ideal relationships with their union, there’s a specific issue: the Department of the Treasury, thus the IRS, has no authority to force Taft-Hartley unions to offer up this information. There is no responsibility for the union to comply and assist, or even take on the reporting themselves. The IRS did give employers some limited liability assistance. If the employer validates that the union offers qualifying plans to employees who meet eligibility, then that constitutes an offer of coverage.

Interim guidance regarding multi-employer arrangements

An employer is treated as offering health coverage to an employee if the employer is required by a collective bargaining agreement or related participation agreement to make contributions for that employee to a multiemployer plan that offers, to individuals who satisfy the plan’s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals’ dependents or is eligible for the section 4980H transition relief regarding offers of coverage to dependents. For more information, see section XV.E of the preamble to the final section 4980H regulations.

Sounds reassuring, but if an employer can’t confirm anything about the union plans, how are they to comply? At Tango we’ve seen several examples – employers may send letters demanding the information, they may create data feeds to pull over the data, and some are even using third parties to call and gather data from the unions. We’ve worked with employers who have as many as 40 or more unions, and getting answers to the questions can be extremely challenging.

Contact Tango Health with ACA reporting questions

Need help with the ACA? We offer a full-service ACA Compliance & Reporting solution and specialize in large, complex businesses including unions. Learn More About our ACA Solution.

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