What Employers Need to Know for ACA Reporting
Affordable Care Act (ACA) Reporting Deadlines Just Around the Corner
it is important that employers understand their roles and responsibilities to stay compliant and avoid financial penalties. With a constantly evolving conversation around the Affordable Care Act (ACA), many employers were
wondering if reporting was going to stay or go.
On Dec. 22, 2017, President Donald Trump signed into law the tax reform bill, called the Tax Cuts and Jobs Act , after it passed both the U.S. Senate and the U.S. House of Representatives. This tax reform bill makes significant changes to the federal tax code. The bill does not impact the majority of the Affordable Care Act (ACA) tax provisions. However, it does reduce the ACA’s individual shared responsibility (or individual mandate) penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.
Individuals continue to be required to comply with the mandate (or pay a penalty) for 2017 and 2018. A failure by employees to obtain acceptable health insurance, or by employers to offer acceptable (affordable) coverage for these years may still result in a penalty for the individual and/or the employer.
As health coverage has expanded under ACA, employers have experienced the increasing burden of reporting to the Internal Revenue Service (IRS), which uses a host of tax forms to ensure certain rules are met. In addition, the federal government continually looks to refine regulations. Therefore, employers and human resources departments must not only be aware of the ACA’s basic rules, but they must also stay vigilant in understanding the constantly changing landscape.
2018 Deadlines Looming
- Review and understand the IRS forms used to report insurance coverage
- Create plans for meeting the reporting deadlines for the first quarter of 2019
- Verify that 95 percent of fulltime employees are insured as transition relief has ended
- Watch for and appeal notices that may state some employees are not receiving required coverage
- Review any new proposed regulations that could affect planning for 2019 reporting
By staying current with ACA requirements and creating strong processes to ensure employee coverage and subsequent reporting, employers can maintain compliance, avoid financial penalties, all while making sure their employees are receiving proper health coverage.
The Employer’s Reporting Role
At its core, the Affordable Care Act’s (ACA) intent was to reduce the number of uninsured Americans. This required the most significant regulatory overhaul to the U.S. healthcare system since Medicare and Medicaid were passed in 1965. In the first quarter of 2016, 8.6 percent of Americans were uninsured, the lowest rate on record. This was partly done by maintaining employer-based health insurance, expanding Medicaid, and creating state and federal Health Insurance Marketplaces. The ACA also uses the Internal Revenue Service (IRS) to administer the individual mandate “tax” and employer penalties under the shared responsibility rules.
As a result, employers bear a reporting burden to the IRS and must stay ahead of the shifting regulatory landscape to ensure compliance and avoid financial penalties. Here are five things employers should know about ACA reporting.
Know the IRS Forms
The ACA requires Americans to have a basic level of health insurance, also known as minimum essential coverage (MEC). MEC includes plans purchased on the Health Insurance Marketplace, Medicare, Medicaid, and employer-based plans, among others (CHIP for children). People who do not have this basic coverage, and do not qualify for an exemption, may be required to pay a penalty. In addition, “applicable large employers” (ALEs), which employ 50 or more full-time or full-time equivalent employees, must offer health insurance coverage to their employees and dependents.
ALEs and AALEs (AALEs – Aggregated Applicant Large Employers, See Employer Aggregation Rules), must report to the IRS whether they offer full-time employees and their dependents the opportunity to enroll in MEC under an eligible employer-sponsored plan. ALEs may face penalties if they do not properly report this information to the IRS. This includes a failure to timely file corrected information return or a corrected statement. Therefore, human resources must be familiar with the IRS forms and their instructions, which are subject to change.
From Description and Requirements
Self-insured (under 50 employees) or fully-insured employers with less than 50. Those who have health insurance that meets the standards of the law may receive Form 1095-B directly from their health care insurer and from employers who have less than 50 full-time employees (small businesses).
Employer provided health insurance at companies that have at least 50 full time workers or full time-equivalents (full-time worker, per the law, is someone who works at least 30 hours a week).
1094-B and 1094-C
Forms 1095-B and 1095-C are accompanied by IRS transmittal forms 1094-B and 1094-C.
IRS Filing Deadlines
The tax reform bill did not change or impact large portions of the ACA, including the Employer shared responsibility (pay or play) rules. The employer reporting requirements under Sections 6065 and 6056 are still in place. It is imperative employers know and adhere to these ACA reporting deadlines for 2019:
Thursday, January 31, 2019
Deadline to furnish Form 1095-C to employees. Thursday, February 28, 2019
Deadline to file Forms 1094-C/1095-C if filing by paper. Monday, April 1, 2019
Deadline to file Forms 1094-C/1095-C if filing electronically.
Monday, April 15, 2019
Tax Day! Individual tax returns are due. Employees must include healthcare coverage information on their individual returns.
While the number and generosity of extensions have lessened, so far, we’ve still seen the IRS extend at least one or more deadlines every year. To practice smart compliance, you cannot rely on the hope of an ACA reporting extension from the IRS. Instead, you should plan ahead to meet the deadline. If meeting the deadline just isn’t realistic, you may apply for an extension.
To apply for an ACA reporting extension with the IRS, submit a Form 8809 on or before the due date of the return for an automatic extension. This form does not require a signature. For an additional 30-day extension, the filer or an authorized agent must sign the form.
Watch For Exchange Subsidy Notices
In late June 2016, the U.S. Department of Health and Human Services (HHS) started mailing notices informing employers that one or more of their employees was certified as eligible for a premium subsidy through the Federal Health Insurance Marketplace. The form specifically stated that the employee either wasn’t offered health coverage from the employer, received unaffordable health coverage, or was unable to enroll because of a waiting period.
The HHS notice also described the appeal process and provided recommendations for employers considering an appeal. To contest, an appeal request form must be submitted within 90 days of the date of the notice. To avoid penalties, employers will need to show they offered qualifying coverage to the employee. Human Resources should put a documented process in place to help avoid or defeat a later adverse action claim. In addition, Human Resources should have a system to track and record employee health benefits. This will also help with the appeals process for any subsidy notices.
Prepare For Proposed Rules & Regulations
In August 2016, the federal government issued proposed IRS regulations to clarify certain reporting requirements. The proposed regulations remove duplicative MEC reporting. For example, reporting is required for only one plan, even if the employee is covered by more than one MEC plan provided by the reporting entity. In addition, reporting is not required for MEC that is conditional upon being covered by another reportable MEC.
Human Resources may also recall that non-discrimination rules were released by the IRS in late 2016. These rules do not focus on gender or race. They are in place to ensure employer-based health plans do not discriminate based on employee compensation. Essentially, this regulation aims to make sure that highly compensated employees and rank-and-file employees receive relatively equal benefits. It is important to be aware of other pending / future changes and to plan accordingly.
A Final Thought
Keeping up with ACA reporting isn’t easy. Employers and human resources professionals need to pay attention to the many tweaks that are continually being made to the ACA’s rules and regulations. It is essential to have processes in place to regularly review changes, track employee benefits and coverage, and plans in place to meet the upcoming reporting deadlines. By doing so, employers can maintain compliance, avoid financial penalties, all while making sure their employees are receiving proper health insurance coverage.
For companies looking at solutions for 2018 reporting, Arcoro is accepting new and current clients who have yet to implement our dynamic ACA compliance module through 1/4/2019.
This module saves companies’ time by using existing data to analyze employees, their benefits, compensation and demographics to effortlessly produce and electronically send all 1094 and 1095 reporting to them and the IRS.