ACA Compliance Update

With the end of the year nearing, it’s not too early to start thinking about compliance with the ACA reporting requirements for applicable large employers (ALEs) with 50 or more employees.

The ACA specifies that employers must provide their workers and their dependents access to qualifying health insurance coverage, meaning coverage that is affordable (for 2020, the affordability threshold is 9.78 percent) and provides minimum value – or potentially make a shared responsibility payment to the IRS if at least one employee receives the premium tax credit for purchasing coverage through the Exchange.

And, you need to report on it as well. There are two forms for reporting information about the health insurance coverage offered that are required annually:

  • 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, which must be sent to the IRS to report summary information for each employer and to transmit Forms 1095-C to the IRS
  • 1095-C, Employer-Provided Health Insurance Offer and Coverage, which is used to report to the IRS summary information for each employee and must also be provided to the employee

For calendar year 2019 reporting, the deadline for providing 1095-Cs to employees is January 31, 2020. Forms 1094-C and copies of 1095-Cs must be filed with the IRS by February 28, 2020, if you’re using paper filing and by March 31, 2020, for the electronic filing method. And it’s important to meet these deadlines: employers can face penalties of $270 per return or statement up to a maximum of $3,339,000 for not filing correct forms.

Unfortunately, these aren’t the only form-related fines employers need to worry about. The information provided on 1094-C and 1095-C is used to determine if an employer owes a payment under the employer shared responsibility provisions of the ACA. For 2020, the payment amounts are:

  • $2,570 for employers not offering minimum essential coverage
  • $3,860 for employers offering minimum essential coverage that is not affordable or does not provide minimum value

Employers that owe a penalty will receive a Letter 226-J from the IRS, the number of which is on the rise as the IRS steps up its enforcement of the mandate.

The IRS’ Q&A on the employer shared responsibility provisions of the ACA can be found here. To learn more about complying with the ACA’s reporting requirements, join our free Healthcare Reform Updates webinar on November 21 or contact Complete Payroll Solutions at 877.253.9020.

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