Keeping up with the news on the Affordable Care Act is difficult, and maintaining ACA compliance can feel like a full-time job. Over the years, we’ve worked hard to provide you with educational resources to help you stay up to date and manage ACA compliance in your organization. To continue in that effort, we’ve put together a (really) long list of frequently asked questions employers and HR professionals have about ACA reporting requirements to be sure you’re prepared when the 2018 ACA deadlines roll around.
ACA Reporting 2018 FAQs for HR and Employers
What ACA forms are required for reporting in 2018?
Under the Affordable Care Act and the ACA Employer Shared Responsibility Mandate, reporting on ACA compliance requires two forms:
- Form 1094-C: Transmittal form accompanying Form 1095-C information returns. Reports on offers of healthcare coverage to all full-time equivalent employees and their dependents.
- Form 1095-C: Employer-Provided Health Insurance Offer and Coverage Form. Furnish to employees and submit to IRS to show offers of coverage.
Who needs to file Form 1094-C?
Applicable Large Employers, often referred to as ALEs, with 50 or more full-time and full-time equivalent employees in the previous year must file Form 1094-C and a Form 1095-C for each employee who was a full-time employee for any month of the calendar year.
Remember, no matter how your company qualifies full-time employees for its own purposes, the ACA’s standards apply to all employers.
What’s the purpose of Form 1094-C?
Under Code sections 6055 and 6056, ALEs must use Form 1094-C to report required information about whether or not they offered affordable minimum essential health coverage (MEC) and enrollment in minimum essential health coverage for eligible employees. Form 1094-C will transmit forms 1095-C to the IRS.
Forms 1094-C and 1095-C will be used to determine whether an employer will be penalized for noncompliance. This penalty will require payment under the Employer Shared Responsibility provisions under section 4980H. These forms will also determine employees’ eligibility for the premium tax credit.
What information will I need to report on Form 1094-C?
Employers will report the following on Form 1094-C:
- The employer’s name, employer identification number, and contact information
- The total number of Forms 1095-C filed (based on number of full-time equivalent employees during 2017 and any non-full-time equivalent employees who did enroll in the employer’s self-insured health plan)
- Proof by month as to whether the employer offered its full-time equivalent employees (and dependents) the opportunity to enroll in minimum essential health coverage
- The number of full-time equivalent employees for each month of the calendar year 2017
- The total number of employees for each month for the calendar year 2017
- The names and employer identification numbers of other employers that are in a controlled group or affiliated service group with the employer
How do I file Form 1094-C?
The IRS encourages all employers to file electronically if possible. But, if any employer must file 250 or more of a single type of form, the employer must file electronically. This requirement applies separately to each type of form. For example, if you’re filing 350 1094-C forms and only 100 forms of another type, only the 1094-C forms must be filed electronically. If an employer applies for and receives a hardship waiver, the electronic filing requirement is not applied.
If filing on paper, the employer should send the forms to the IRS in a flat mailing package. On each package, write the employer’s name, number the packages consecutively, and place Form 1094-C in package number one. According to postal regulations, these forms must be sent by First-Class Mail.
Before completing your 1094-C, make a detailed review of all instructions. Once you have completed the form, review these forms with thorough evaluation to ensure they are correct and complete. Incorrect or incomplete forms are subject to penalty.
Do I need to keep copies of ACA forms once they’ve been filed with the IRS?
Be sure to retain copies of all forms and returns filed with the IRS for at least three years from the due date. If you do not keep copies, you should be able to reconstruct the data given in the returns in the event of an audit.
When is the Form 1094-C filing deadline for reporting on 2017?
Employers must file the paper Form 1094-C with the IRS by Wednesday, February 28, 2018.
Employers must file the electronic Form 1094-C with the IRS by Monday, April 2, 2018.
Who needs to file Form 1095-C?
ALEs with 50 or more full-time equivalent employees need to furnish their employees with Form 1095-C and file Form 1095-C with the IRS. If a small business employer is a member of a controlled or affiliated service group that has 50 or more full-time equivalent employees in total, that employer is also responsible for furnishing and filing Form 1095-C.
What’s the purpose of Form 1095-C and why do employers need to give this form to their employees?
Form 1095-C provides important information employees need to complete their individual tax returns. On Line 61 of individual tax returns, employees must show whether they or their family members had minimum essential coverage.
Which employees receive a Form 1095-C?
Employers should prepare a Form 1095-C for each employee whose hours of service equaled 130 or more hours in a month. This includes those employees who did not elect to enroll in the employer-sponsored health plan.
Employers should also prepare a Form 1095-C for any part-time employees enrolled in the employer-sponsored plan. Employers do not need to prepare Form 1095-C for any part-time employees not enrolled in the employer-sponsored plan.
What information will employers need to report on Form 1095-C?
Employers will need to report the following information on Forms 1095-C:
- Proof of MEC
- Employees’ ID numbers and social security numbers (these may be truncated on forms furnished to employees)
- Employees must provide the social security number of their dependents.
When is the deadline to furnish Form 1095-C to employees?
Originally, employers needed to furnish their employees with a Form 1095-C by Wednesday, January 31, 2018. However, the IRS has granted an automatic 30-day extension to all employers for the 2018 filing year only. All employers must furnish Form 1095-C to their employees by Friday, March 2, 2018.
Unless an employee has given specific consent to provide this form electronically, furnish all Forms 1095-C to employees by mail or deliver by hand.
Do employers need to file Form 1095-C if they’ve already furnished the form to employees?
Employers must file copies of Form 1095-C with the IRS by Wednesday, February 28, 2018 if filing by paper or Monday, April 2, 2018, if filing electronically.
What are the IRS penalties for late or incomplete Form 1094 and Form 1095?
Failure to file complete and accurate Forms 1094-C by the form deadline will result in penalties equal to $250 per form, not to exceed $3 million per year. Failure to file and furnish correct information on Form 1095-C could result in a $500 per form penalty for employers. That is not a cheap penalty to blow off. The best way to avoid these penalties is to report on ACA compliance using the proper forms and submitting them to the IRS by the deadline. If you need more time to gather data to complete the forms, file for an extension. We will discuss these steps in the nex questions.
How can I avoid filing penalties for ACA reporting?
To avoid penalties from the IRS, report on ACA compliance with the IRS using Forms 1094-C and 1095-C on or before the deadline. The ACA requires all ALEs to report health benefits coverage to the IRS through Form 1094-C and 1095-C. ALEs must furnish employees with a related statement of coverage using Form 1095-C. Employers must complete these forms for any employee who reached 130 hours in a month. Here are a few tips to complete ACA reporting forms without penalty:
- Pay careful attention to the 1094-C instructions. There will be penalties for forms that are incomplete or incorrect.
- File and furnish forms in the correct fashion: ALEs filing 250 or more Forms 1094-C or Forms 1095-C must file through electronic delivery. Employers must mail or hand-deliver Form 1095-C to employees unless the employee has given specific consent for electronic delivery.
- File forms by the correct due date or file for an extension with Form 8809.
Can you file for an extension for ACA reporting forms?
The changes in filing extensions over the last few years have caused some confusion. There have been application requirements and general across-the-board extensions, so what should employers expect in 2018?
Things should go back to the original plan: the IRS gives set deadlines with the ability for employers to apply for extensions on an individual basis. To apply for an extension on 2018 ACA reporting forms, submit 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.
Does my organization qualify for transition relief?
In years past, the IRS offered transition relief to certain qualifying organizations during the new implementation of the Affordable Care Act and the Employer Mandate. In 2018, for reporting on 2017, section 4980H transition relief is no longer available.
What are the ACA safe harbors and how can they protect my organization?
The ACA not only requires ALEs to offer health coverage to full-time equivalent employees, but also requires that health plan be affordable with at least 60% minimum value. According to the ACA, an “affordable” plan is one that costs no more than 9.5% of an employee’s total household income. But knowing an employee’s total household income involves knowing more than the salary your business pays them. Other factors like spouse’s income, variable hours, and pre-tax contributions can make a difference in an employee’s income. These ACA safe harbors help employers ensure the health insurance coverage they offer to their employees will meet the affordability requirements of the ACA.
There are three types of ACA safe harbors:
- W2 wages safe harbor: See the employee’s current year’s wages in Box 1 on the employee’s W-2.
- Rate of pay safe harbor: Employers may take the amount equal to an employee’s hourly rate and multiply by 130 hours per month for hourly employees.
- Federal poverty line safe harbor: Employers may use the FPL in effect six months before the beginning of the plan year.
Using these safe harbors is optional. You can apply different safe harbors to different categories of employees, provided that you do so consistently for all employees in a particular category. Read more about ACA safe harbors here.
Is the IRS really going to go after my company if I don’t submit ACA reporting forms?
Yes. The IRS has already been issuing penalty notices to employers who have failed to comply with the ACA Employer Shared Responsibility Mandate in the past.
This all seems like a lot of work. What tools are available to help employers with reporting?
Managing ACA reporting requirements is no simple task. Employers need to have the right system and strategy in place for successful compliance. Reliable ACA compliance software will track, integrate, and analyze data across time and attendance, core HR, benefits, and payroll. Because employers must complete a Form 1095-C for each full-time employee, the time and effort involved is consuming. Form 1095-C software allows employers to maximize efficiency for health care reform paperwork.
With ACA reporting software, employers can receive accurate visibility for hours of service including look-back and stability periods, for full-time, part-time, and variable-hours employees.
Additionally, this tool can automate benefits eligibility notifications and employee plan enrollment. With this information automatically updated and recorded, ACA management software allows employers to spend less time managing the hassles of paperwork and timesheets. Instead, they can focus on the bottom line for their businesses.
What are the next steps for HR and employers?
Unlike other information returns and forms like W-2s, the 1094 and 1095 forms can require information from multiple systems of record for one annual filing. This means employers need to gather tracked information from HR, payroll, benefits, and more. If you wait until just before the ACA reporting deadline in 2018 to act on tracking and reporting, it could be difficult to gather all the data and complete the forms in time. This could leave you to face steep financial penalties from the IRS.
Get a head start on ACA reporting for 2018:
- Determine if your business qualifies as an ALE according to the Affordable Care Act and Employer Mandate.
- Ensure the correct systems are in place for accurate ACA reporting and compliance for your business. Do you have the right tools for tracking and documenting employee status, benefits eligibility, and benefits enrollment?
- Review the IRS reporting information page and the IRS Form 1094 and Form 1095 instructions.
We are not far from the 2018 ACA reporting deadlines. Start preparing your organization now for ACA compliance and reporting in 2018 to avoid getting stuck with big penalties.
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