Everything you need to know about the ACA and Taft-Hartley plans

Are you an employer with union workers? Are you worried the Affordable Care Act (ACA) is going to muddle this symbiotic relationship? Let us offer you a word of advice: Don’t overcomplicate it.

It’s true the ACA has caused problems for certain industries (see: staffing agencies), but that doesn’t have to be the case for employers with union employees.

If you fall into this category, there are a few key pieces of information you need to know. And it all starts with understanding Taft-Hartley plans. Let us explain.

What is a Taft-Hartley plan?

A Taft-Hartley plan, also called a multi-employer welfare arrangement (MEWA), is an older law that governs collective bargaining agreements (CBAs) for unions. As part of a Taft-Hartley plan, unions negotiate a wellness plan into a bargaining agreement. In short, a Taft-Hartley plan is a health plan the union is providing to union members on behalf of the employer.

So, what does this mean for you, the employer, and who’s responsible for providing the benefits to the union employees?

While you make a contribution to the plan on behalf of your employees, the union is technically the entity providing coverage.

If you’re worried this might cause confusion come reporting time, don’t be. We’ve got you covered.

How does the employer report a Taft-Hartley plan?

Under the ACA, applicable large employers (ALEs) — those with at least 50 full-time equivalent employees — are required to offer affordable health care with minimum essential coverage (MEC) to ACA full-time equivalent employees.

However, with Taft-Hartley plans, it’s the unions, not you, that are providing health care to union workers. As a result, you can’t know for sure whether the health care is affordable or meets MEC.

And yet, you’re still required to report to the IRS whether your employees were offered coverage. You report this on line 16 of the 1095-C form.

Line 16 is where you enter whether someone is enrolled in coverage and if the coverage that’s being offered is affordable. Since you don’t have this information (the union providing the health care does), you use indicator code “2E.” This code, which means “MEWA transition relief,” signals to the IRS that you have made the contribution to the union and aren’t responsible for whether their Taft-Hartley plan meets MEC requirements.

Things to remember

Just because you’re not providing the actual health care coverage to your union employees doesn’t mean you’re completely off the hook. Not only do you need to make sure you’re contributing to the union, but you need to you continue to accurately track the hours worked by these employees.

When it comes to determining if you’re an ALE, union workers are included in the calculation. You might consider these individuals separately, but they do count toward the overall number. So, remember, stay on top of your tracking, mark “2E” for union workers on line 16 of the 1095-C form, and don’t be afraid to utilize any and all resources if you have questions during reporting season.