Compliance Alert: Employer Mandate Question

Our experts are always on call for compliance support. Here is the answer to a recent question from a broker about the ACA Employer Mandate:

Question

Does an inactive business still have 2018 employer-mandate responsibilities if they employed more than 50 employees for more than 50% of 2018? The employer closed their doors late in 2018. Are they still responsible for 1094/1095 reporting or other employer mandate issues?

Answer

Yes. Reporting would be required in 2019 if the company was considered an applicable large employer (ALE) for 2018 based on 2017 data — just like W-2 reporting would still be required. An employer is considered an ALE based on average full-time equivalents (FTEs) in the previous calendar year. It doesn’t matter if the employer exceeds 50 FTEs in a given month during the current year. What matters is whether the employer averaged 50 or more FTEs over all 12 months of the previous calendar year. In other words, if the employer averaged less than 50 FTEs during 2017, they would not be an ALE for 2018, and would not be required to offer coverage to avoid potential Section 4980H penalties. When it comes to logistics, this issue is best addressed with tax counsel, since they are in the best position to understand the various corporate obligations with respect to reporting and the processes to follow.

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