{"id":49,"date":"2015-05-21T16:38:08","date_gmt":"2015-05-21T16:38:08","guid":{"rendered":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/?p=49"},"modified":"2015-05-21T16:38:54","modified_gmt":"2015-05-21T16:38:54","slug":"dumb-ideas-to-avoid-the-aca","status":"publish","type":"post","link":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/2015\/05\/dumb-ideas-to-avoid-the-aca\/","title":{"rendered":"Dumb Ideas to Avoid the ACA"},"content":{"rendered":"

\"fool\"<\/a>There are a lot of foolish ideas about ways to avoid the employer mandate of the Affordable Care Act (ACA).\u00a0 One of the worst I have heard is to make your company \u201csmall\u201d by separating it into several smaller ones.\u00a0 The thought is that each entity will be treated as a separate small employer and therefore will not be subject to the ACA employer mandate.\u00a0 That mandate requires employers with 50 or more full-time equivalent employees to offer health insurance coverage to all full-time employees working 30 hours or more per week or pay a fine.<\/p>\n

There are several legitimate reasons to separate a company into different units or subsidiaries including for credit, liability and corporate governance purposes.\u00a0 It is also not unusual for a company to use different federal tax ID numbers for different units, locations or subsidiaries, and in some cases, that is required by law.\u00a0 However, such arrangements will not absolve you of responsibility for compliance with the ACA.<\/p>\n

Long before the ACA, the Employee Retirement Income Security Act of 1974 (ERISA) established minimum standards and protections for employees enrolled in private employer \u201cwelfare\u201d plans.\u00a0 Health insurance offered by an employer is an employer welfare plan.\u00a0 Internal Revenue Code (IRC) sections 414 and 1563 specifically address \u201ccontrolled groups\u201d of companies.\u00a0 The gist of these laws is that companies with \u201ccommon ownership\u201d are treated as one employer in order to determine if a plan maintained by any of the commonly-owned companies meets the requirements of the ACA.\u00a0 Common ownership rules may apply even if the related companies don\u2019t have the exact same ownership structures.<\/p>\n

While I\u2019m at it, let me address another somewhat related idea: separating a family-owned business into several \u201ccompanies\u201d with each company owned by a different family member.\u00a0 IRC section 1563(e) deems shares owned by your immediate family to be constructively owned by you, and if you own more than 50% of the stock or have more than 50% of the voting power, you also constructively own the shares of your parents, grandparents and adult children.\u00a0 This is true even if there are other legitimate reasons for such an arrangement.<\/p>\n

My favorite dumb idea is the ostrich approach:\u00a0 If I ignore it, it will go away.\u00a0 The law will be changed or repealed by the current Congress, and I\u2019ll be saved.\u00a0 No.\u00a0 Remember that the healthcare mandate is considered a tax, and, like all taxes, the mandate could be repealed, but that is not going to happen before 2017.\u00a0 There simply aren\u2019t enough votes in Congress to override a Presidential veto.\u00a0 All Applicable Large Employers (ALEs) are required to file informational returns with the IRS about offers of coverage to their employees, so it isn\u2019t a matter of \u201cif\u201d you get caught but rather \u201cwhen\u201d you get caught.\u00a0 You\u2019ll not only pay the fines for not offering coverage, but you\u2019ll also pay fines for not filing the required returns, late penalties and interest.<\/p>\n

The IRS is not subject to the same legal process that private parties must follow to place a lien on or confiscate your assets, and they usually go after your cash first.\u00a0 So will the attorney, the good one with extensive ERISA and tax experience that you\u2019ll have to hire to represent you and negotiate on your behalf.\u00a0 Good ERISA and tax attorneys may charge up to $1,500 per hour, but hiring one doesn\u2019t guarantee you won\u2019t pay the fines and penalties.<\/p>\n

The alternative is to comply with the ACA employer mandate.\u00a0 It\u2019s a lot less risky and in the end will be a lot less costly.\u00a0 If you have a corporate structure like I described, I encourage you to review it with an ERISA attorney or a tax professional to make sure you are in compliance.\u00a0 If you would like to discuss compliance with the ACA and learn about the legitimate ways we\u2019re helping our clients to minimize the impact of the ACA, please email me at mdmowski@comprehensivebenefitservices.com<\/a> or call me at (877) 256-0800.<\/p>\n","protected":false},"excerpt":{"rendered":"

There are a lot of foolish ideas about ways to avoid the employer mandate of the Affordable Care Act (ACA).\u00a0 One of the worst I have heard is to make your company \u201csmall\u201d by separating it into several smaller ones.\u00a0 The thought is that each entity will be treated as a separate small employer and\u2026 Read More »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-49","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/posts\/49","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/comments?post=49"}],"version-history":[{"count":0,"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/posts\/49\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/media?parent=49"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/categories?post=49"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.comprehensivebenefitservices.com\/Blog\/wp-json\/wp\/v2\/tags?post=49"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}