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Human Resources & Payroll Blog

What are the ACA Reporting Requirements for 2021?

May 4, 2021 7:15:00 AM / by John Duval

The Affordable Care Act (ACA) became law in 2010, and it has since made healthcare more accessible and affordable for millions of uninsured Americans. 

Although the ACA offers many benefits to individuals, it also carries annual reporting requirements for employers. To stay in compliance, you’ll need to understand how the ACA applies to your organization and workforce.

Current ACA Reporting Requirements

A core reporting component of the ACA pertains to “applicable large employers,” also known as ALEs. These are organizations with 50 or more employees, and each must submit an annual benefits report to the IRS. The goal of the annual ACA reporting requirement is to ensure that employers are offering minimum essential coverage (MEC) to at least 95 percent of employees. ALEs who don’t offer the minimum required threshold of benefits are subject to non-compliance penalties imposed by the IRS.

Currently, ACA reporting is performed by submitting IRS Form 1094-C. A report with similar information must also be provided to employees using IRS Form 1095-C. Both forms provide details about the benefits coverage offered to full-time employees and their dependent children. 

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On the surface, it sounds simple enough to provide information about the benefits offered to your employees. However, the ACA requires employers to report on all full-time and full-time equivalent employees, which—per IRS definitions—includes any employee working at least 30 hours per week. This means you could have employees working part-time hours who should be considered full-time and eligible for benefits under the ACA. 

Categorizing employees properly as full-time or part-time is critical to making sure you submit an accurate count of benefits-eligible employees on your ACA reports. By leveraging the reporting capability of an integrated HR payroll system, you can have more transparency into the hours employees work throughout the year and when employees become eligible for benefits. An integrated system that connects time tracking with benefits and payroll provides real-time workforce reporting, so you can gauge your overall compliance with ACA requirements and make adjustments as needed.

ACA Reporting Requirements for 2021

Changes to ACA reporting guidelines occur periodically, and 2021 is no exception. Specifically, there have been two key changes that may impact your ACA reporting in 2021:

Revised Reporting Deadline

The deadline for employers to provide employees with a copy of their 1095-C reporting form has historically been Jan. 31 of the following year. However, for 2021, the deadline was extended to March 2, 2021.

The other key ACA reporting deadline for 2021 is the due date for filing ACA reports with the IRS, and it remained unchanged. Forms 1094 and 1095 must have been filed with the IRS physically by Feb. 28, 2021, and electronically by March 31, 2021.

New Affordability Threshold

The affordability threshold represents the maximum amount employers can charge employees for the least expensive self-only benefits plan, as a percentage of the employee’s household income. In 2020, the affordability threshold was 9.78 percent, and the IRS increased it to 9.83 percent in 2021.

Keeping track of the affordability threshold is important because it can determine if the pricing of your benefits plans is compliant with the ACA. Although you likely won’t know your employees’ household income, there are different methods approved by the IRS for calculating the affordability of your plans. Using the best method for your organization will help you complete your ACA reporting requirements for 2021.

Tips for Meeting ACA Reporting Requirements in 2021

The key to managing your ACA reporting is to have the resources and tools that make it easy to gather the necessary employee and benefits data. That way, you’re in a better position to complete and submit the required IRS forms on time. Having the right systems to help you manage the interrelated activities that impact your ACA compliance—such as payroll, time and attendance, and benefits—is critical. Any discrepancies between the systems you use to store this information can lead to potentially inaccurate data being submitted to the IRS. 

Using an integrated payroll system makes it possible to access accurate and complete data for ACA reporting. An integrated system syncs your employee data in one platform so you can get all the information you need to complete IRS forms 1094 and 1095. The activities this type of system syncs include:

  • Payroll management.
  • Talent acquisition.
  • Benefits administration.
  • Time and attendance scheduling.
  • Employee onboarding and offboarding.
  • And more.

Moreover, when you use an integrated system with a dedicated module for ACA reporting compliance, you can access relevant benefits enrollment tools and receive automated benefits eligibility notifications. 

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Integrate Your Payroll and HR Systems for Better Compliance

Maintaining healthy compliance with the ACA and other regulations requires tools for accurate and consistent reporting. When the information in your payroll system conflicts with the data in your HR systems, not only do you have to research the discrepancies, but you also have to repair errors and rerun reports while critical reporting deadlines loom closer. Conversely, by integrating your payroll and HR systems, you can save time and improve the accuracy of your workforce data. To learn more, read our e-book, The Hidden Costs of Managing Employees in Disconnected Systems.

 

The Hidden Costs of Managing Employees in Disparate Systems

Topics: HR Compliance

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