The Affordable Care Act (ACA) reporting requirements are on the minds of employers, C-level executives and business owners. With hefty penalties for not providing the right information on the annual returns and for not filing before the deadlines, companies realize that they need to understand what health insurance coverage data they have to report and when. The ACA laws are complicated, but companies must follow them to be compliant with the Internal Revenue Service (IRS).

The New Requirements

An applicable large employer (ALE) is required to submit two forms known as the C-Forms. These forms are IRS Form 1094-C and IRS Form 1095-C. Large employers are companies with 50 or more full-time employees. A full-time employee (FTE) is a person who works 30 hours or more per week or 130 hours per month. Under certain conditions, other reporting forms are required known as the B-Forms. These forms are 1094-B and 1095-B.

IRS Form 1094-C

Form 1094-C is titled the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. The 1094-C is submitted to the IRS and provides information about a company’s full-time employees. The information includes the type of health insurance the company offers full-time employees and the time period that the health insurance covers. This form is also used for the company to tell the IRS about its workforce, such as the number of full-time employees and the number of part-time employees.

IRS Form 1095-C

IRS Form 1095-C is titled Employer-Provided Health Insurance Offer and Coverage Insurance. The 1095-C uses the same information provided in Form 1094-C, but the employer sends this form to employees. Every FTE has to receive the 1094-C. The employees who are not required to get a C-Form are those in a waiting period to start receiving health coverage. Employers are also not required to give a C-Form to variable-hour employees who are currently in an administrative period.

IRS Forms 1094-B and 1095-B

There are other reporting forms required by the IRS known as the B-Forms. They are IRS Form 1094-B and IRS Form 1095-B. Form 1094-B is titled Transmittal of Health Coverage Information Returns. Form 1095-B is titled Health Coverage. Insurance companies that underwrite an employer-sponsored health care plan and companies that self-fund their health insurance plans are required to supply health insurance coverage information to the IRS and also to the individual who is insured either under the underwritten employer plan or the self-insured plan. Employers send the 1094-B form to the IRS and the 1095-B form to the insured employee.

The IRS permits self-insured employers to report its B-Form information on Part lll of the 1095-C form sent to employees. This combined reporting helps to simplify the reporting process. Employers who have fully-insured health care coverage do not need to send out B-Forms, only the insurance companies underwriting the plans have to submit B-Forms.

Reporting Requirements for Small Employers

There are also some ACA reporting requirements for small employers. A small employer is any company with fewer than 50 full-time employees. If a small employer offers self-insured health insurance to its full-time employees, it has to report this information on the B-Forms.

 

Deadlines for Filing C-Forms and B-Forms

The deadline for companies to send 1095-C and 1095-B to each of its full-time employees is Jan. 31 for the prior year’s coverage. Employers also have to send the 1094-C and the 1094-B forms to the IRS. For companies that need to send out less than 250 forms, the deadline is Feb. 28 for the prior year’s coverage. These employers have the option of submitting the forms to the IRS on paper or submitting them electronically. However, if sent on paper, the deadline is Feb. 28. If sent electronically, the deadline is March 31.

For companies that send out 250 or more C-Forms and B-Forms to the IRS, the deadline is March 31 for the prior year’s coverage. All submissions must be filed electronically through the ACA Information Returns (AIR) system set up by the IRS. The system allows for the e-filing of all ACA forms.

Other Important Information for Employers

The IRS imposes penalties for employers filing forms incorrectly, or filing forms after the deadlines. However, for employers with 50 to 99 full-time employees, there is often no penalty tax.

Large employers have the option of hiring third-party vendors to submit the ACA required forms to the IRS and to the full-time employees. Although this can make the submission process more efficient, every company is still responsible for submitting accurate C-Forms and B-Forms before the deadlines. If a vendor makes errors when filing the forms with the IRS, the employer is liable and can face penalties. The third-party vendors are also subject to the same requirements applicable to third-party tax return preparers.

The Reasons for ACA Reporting Requirements

Congress enacted the reporting requirements for two important reasons. The first is a way for the IRS to know if large employers are offering their full-time employees affordable health insurance. Alternatively, the reporting requirements tell the IRS if companies are paying the penalty tax for not providing health coverage. By requiring the forms, the IRS knows which companies should pay the penalty tax.

Another reason for the reporting is to help the IRS to verify whether or not individual employees are eligible for the premium subsidy. The IRS can determine this once the agency knows the type of health insurance coverage offered by the employer and whether the employees offered the health plan are full-time or part-time.

Because the IRS now imposes a penalty tax for adults who don’t have health insurance, the reporting requirements help the IRS to keep track of people who have health insurance, and people who have to pay the penalty tax because they haven’t obtained health care coverage.

The ACA reporting requirements are important for a number of reasons. The best way for large employers to ensure compliance is by understanding what is expected of them. The IRS website has the ACA Information Center that describes and explains C-Forms and B-Forms and offers other information employers need to know.

Although the Internal Revenue Service (IRS) imposes substantial penalties for late filing, the agency has recently announced that employers, who missed the June 30, 2016 deadlines, still have a chance to file the required Affordable Care Act (ACA) returns without any penalties.

IRS Relaxes Penalties

During this first year of reporting requirements, the IRS is showing its flexibility to employers who chose to electronically submit IRS Form 1094-C, yet missed the June 30 deadline. The IRS is not penalizing employees who made “legitimate efforts” to file on time, as long as they file the ACA reports as soon as they can by registering with the ACA Information Returns (AIR) system. Even though the June 30 electronic filing deadline has passed, the AIR system still accepts form submissions.

The IRS announcement doesn’t define what “legitimate efforts” are and so are open to interpretation. The best way for employers to avoid any problems such as late filing penalties is to document their efforts to be compliant such as detailing issues that resulted in late filing.

Other Filing Issues

Late filing is not the only situation in which the IRS is flexible. If employers submit the IRS forms electronically, but the AIR system rejects a submission for any reason, the employer has 60 days to re-file replacement forms. If an employer submitted the forms, but received a message that the forms were accepted, but had errors, the employer can resubmit the corrected forms as many times as needed, even after the June 30 deadline.

The ACA Reporting Requirements

The Internal Revenue Code Section 6056 requires reports that large employers offered their full-time employees health insurance. A large employer is defined as any company with at least 50 full-time employees. If a company doesn’t provide health coverage, it faces huge penalties.

Every large employer has to submit a variety of IRS forms to detail the health insurance provided to full-time employees in the prior year. By filing Form 1094-C about the total health care coverage offered and Form 1095-C for each individual employee, a company proves that it is in compliance with the ACA mandates. Other required documents are Forms 1094-B and 1095-B.

Will This Leniency Continue?

The IRS leniency policy could extend beyond the initial reporting year. The IRS may decide during the transition period to give employers more leeway as they become accustomed to the new reporting requirements. On the other hand, the IRS may decide that one year is enough and enforce penalties for next year’s filing.

Whether the IRS will be lenient next year with late filers of ACA reports remains to be seen.

For your ACA reporting needs visit www.Outsource1095.com.

 

The Affordable Care Act (ACA) requires large companies to report its health coverage offerings to the Internal Revenue Service (IRS). This requirement started in January 2015 as part of the Employer Shared Responsibility (ESR) Provisions of the ACA. The reporting of the health coverage is an annual requirement.

Is This Reporting Required for Your Company?

Every Applicable Large Employer (ALE) is required to provide detailed information about the health insurance offered to all of its full-time employees. If the Plan offered is Fully Funded the information to be reported to the IRS includes identification of the ALE, identification of full-time employees to whom an offer of coverage is made, and duration of the offer. If the plan is Self-Insured, then additionally the IRS requires information of the spouses and dependents covered under the full-time employees plan. The definition of full-time is a person working, on average 30 hours each week or working 130 hours per month. An ALE is any company that has 50 or more full-time staff members.

Companies with less than 50 full-time employees are not required under the ESR provision to report this health insurance information. However, under IRS section 6055, small companies that are self-insured are required to report the health insurance coverage of its employees, their spouses and their dependents, even though the employers are not subject to the employer shared responsibility provisions or the information reporting requirements for ALEs. These non-ALEs use Form 1095-B, Health Coverage, and the transmittal Form 1094-B, Transmittal of Health Coverage Information Returns, to meet the information reporting requirements for providers of minimum essential coverage.

ACA Reporting Deadlines

For the tax year 2016, reporting starts in January 2017. IRS Section 6056 requires employers to file forms 1094-C and 1095-C which detail the number of full-time employees you have. These forms also reveal which employees you offered health coverage to during the tax year. These forms have to be filed by February 28, 2017. If your company files the forms electronically, the deadline is March 31, 2017. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.

Every ALE has to give its full-time employees the form 1095-C by February 1, 2017.

Possible Penalties Imposed

Any ALE has to provide minimum essential coverage (MEC) that is affordable to all its full-time employees. If an employer doesn’t meet this requirement, it is subject to penalties. To avoid penalties, the Applicable Large Employer has to offer coverage to at least 95 percent of its full-time employees, their spouses and dependents in 2016.

Other penalties are based on the number of full-time employees that an ALE fails to offer affordable health insurance to. Penalties are also imposed if the health plan fails to meet the minimal actuarial value of at least 60 percent of allowed benefits costs.

Employers also face penalties for failing to file the appropriate forms by the deadline.

It’s important that all large and self-insured employers take steps to meet the IRS reporting requirements for the Affordable Care Act. This is extra work, but it is necessary to ensure that full-time employee get the health coverage they and their families need and is used to report the information the IRS needs to administer the employer shared responsibility penalties. The information is also used to identify individuals who are ineligible for a premium tax credit because they were offered employer-provided insurance that was affordable and provided minimum value.