Complying with ACA Reporting Requirements
August 25, 2017
Employers Should Comply Now with ACA Reporting Requirements
The ACA May Be Here to Stay
Congress made several attempts, but ultimately failed to garner the votes needed to repeal and replace, or even amend the Affordable Care Act. Although President Trump continues to urge Congress to find a way, the reality for now appears to be that the ACA is here to stay.
If employers have been procrastinating with their ACA compliance reporting, it’s time to start filing those reports. The IRS has indicated that it is actively searching out employers that don’t comply with reporting requirements and is ready to assess fines for noncompliance. In fact, the IRS expects to collect over $228 billion in ACA related fines.
Does Your Company Need to Report?
The ACA contains several reporting requirements for “applicable large employers” (ALEs). These employers have 50 or more full-time employees, including full-time equivalent (FTE) employees. According to the IRS, “A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.” This calculation can get a little complicated; if you are unsure whether your company has 50 or more full-time employees, visit this page at the IRS website.
If your business employs less than 50 full-time or FTE employees, it is not an applicable large employer, and therefore, it is not subject to the IRS reporting requirements in the ACA. If your company does employ more than 50 full-time employees, read on.
IRS ACA Compliance Validation System
The IRS has developed an ACA Compliance Validation System (ACV) to help it identify potentially non-compliant Applicable Large Employers and calculate the penalty under the Employer Mandate. It was supposed to be implemented in January of this year, but an April 7, 2017 report of the U.S Treasury Inspector General for Tax Administration (TIGTA) noted the implementation had been delayed until May 2017. There have been no further delays announced, so to be safe, employers should assume that the ACV may be operational now. The IRS has given every indication that it intends to begin assessing penalties and collecting from noncompliant employers.
What Are the ACA Reporting Requirements?
ALEs are subject to the employer shared responsibility provisions of the ACA. That means large employers are required to offer qualifying health coverage to their full-time employees (and their dependents) or potentially be liable for an assessable payment, if at least one full-time employee receives the premium tax credit for coverage in the Marketplace.
The IRS requires ALEs to file the following reports:
- Form 1094-C and Form 1094-C Instructions, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
- Form 1095-C and Form 1095-C Instructions, Employer-Provided Health Insurance Offer and Coverage
The IRS will use the information provided on Form 1094-C and Form 1095-C to administer the employer shared responsibility provisions. The filing deadlines for these forms were February 28, 2017 (if filing on paper) and March 31, 2017 (if e-filing).
ALEs that sponsor self-insured group health plans are required to submit additional information on Forms 1094 and 1095. If your company self-insures, you’ll find more information in this IRS Q&A.
File Late If You Must, But Don’t Fail to File
If your company did not file its ACA reporting as required this year, act now. Although you’ve missed the filing deadlines, penalties for noncompliance increase with greater delays. According to attorney David Pixley of Graydon, Head & Richey LLP, “Filing late may cost you, but you may find it better to be late than never. Because, the standard per return penalty of $260 (max $3,193,000 per calendar year) drastically increases for violations due to “intentional disregard” to a per return penalty of $530, with no cap on the total penalty.”
A Human Capital Management (HCM) System Can Make Reporting Easier
The information you’ll need to file your ACA reporting is easily accessed if you have an HCM system in place. You’ll be able to calculate the number of full-time equivalent employees based on your data about employee hours worked. You can consult your benefits system for all data related to your employee health plan. Asure Software’s Human Capital Management solutions collect and centralize these types of essential HR information, and much more.