As a new year approaches, brokers and employer groups are busy enrolling in health coverage for the coming year. But, as required by the Affordable Care Act, many groups are also busy documenting the coverage that was provided this past year. Help your groups stay in compliance and avoid penalties with a better understanding of ACA reporting requirements and tools to streamline the process.
The Affordable Care Act, or ACA, signed into law in 2010, outlines healthcare requirements for employers. Requirements vary depending on the size of an organization. Small businesses are defined as organizations with fewer than 50 full-time employees (FTEs), while large businesses, referred to as Applicable Large Employers (ALEs), are those with an average of at least 50 full-time equivalent employees.
Under the ACA, ALEs are subject to the employer shared responsibility provision. There are two important components of this provision:
Affordable coverage is determined by evaluating the cost of health coverage for one individual (even if their dependents are covered) and that individual?s household income. Under the ACA, a health plan covering only an employee that costs 9.61% or less of the employee?s household income is considered an affordable coverage plan.
ALEs are required to file ACA reports to the IRS. If you are an administrator for an ALE or have ALEs in your book of business, you?ll want to ensure you have the appropriate information and documents prepared to file federally by the appointed dates each year. (More on that below.) Additionally, some states, including California, Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, New Jersey, Rhode Island, Vermont, Washington, and the District of Columbia require filing with state agencies.
Small employers with self-funded plans may also be required to file ACA reporting.
The IRS provides ACA filing deadlines each year and charges late fees for filing after a deadline. For the reporting year 2021, filing deadlines are in early 2022. Stay in compliance and avoid late fees by knowing the key dates for 2021:
And if you have employees located in Washington D.C. or one of the 10 states that require state filing, you may have additional deadlines that differ from the federal deadlines above. Check with each state?s tax authority to verify state ACA reporting requirements.
To remain in compliance with the ACA, an applicable large employer must file both a Form 1094-C and a Form 1095-C with the IRS for each full-time employee. Similar statements must also be provided to each employee.
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage form, is the form distributed to each employee and includes information like employee social security number and contact information, offer of insurance and coverage status each month, as well as any covered dependents.
Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns form, details additional information about the ALE including the number of 1095s an ALE is submitting, total number of FTEs, and minimal essential coverage indicators.
These forms can be filed online through the IRS website or by mailing paper forms to the appropriate IRS Service Center.
If you are an administrator for an ALE or have ALEs in your book of business, you know accurate tracking and reporting helps employers stay compliant and avoid penalties. A solution that can track eligibility and offers of coverage per employee over time makes it easy to accurately gather information and generate the required 1094 and 1095-B/1095-C forms for ACA reporting.
Did you know? ACA tracking is already included with your Ease subscription — all you need to do is head to your marketplace to enable ACA reports. If your groups have been in Ease for a year or more, it?s simple to generate the 1094 and 1095-B/C forms for a company as well as for each employee and their dependents.
Fill out the form to discover more.