ACA Reporting: Answers for Employers
Though Affordable Care Act in Flux, Deadlines Still Approaching
Given the outcome of the presidential election, many employers took a “wait and see” approach to the ACA. With deadlines looming, there’s a lack of clear-cut direction. In this post, we’ve provided answers to some common questions from employers.
Trump won. Didn’t ACA go away?
A key element of President Trump’s campaign was to repeal and replace Obamacare, and changes are likely to come. However, in 2016, ACA was the law of the land. Applicable Large Employers (ALEs), those averaging 50 or more full-time-equivalent employees in 2015, are currently obligated to fulfill reporting requirements for 2016.
What about the Executive Order related to ACA?
On his first day in office, President Trump signed an executive order titled Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal. It directs federal agencies to use discretion “to the maximum extent permitted by law” in waiving, deferring, and delaying ACA provisions that pose a fiscal or regulatory burden, fee, tax, or penalty on states, individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.
Employers are not specifically mentioned in the executive order, though it’s likely they are intended to be included. In addition, while it reinforces the intent to repeal, the executive order itself does not change the law. Furthermore, it remains unclear how the IRS may apply its newly-granted discretion to ACA filings. As a result, without specific notice by the IRS, prudent employers are still following the employee notice and filing requirements.
OK, so what are the deadlines this year?
March 2, 2017, is the deadline for notice to employees (most commonly a copy of the 1095-C). The deadline for paper filing of forms 1094-C and 1095-C is February 28, 2017. The deadline for electronic filing is March 31, 2017. Electronic filing is required for organizations submitting 250 or more returns.
What has changed from last year’s filings?
The good news is that the 2016 IRS forms and instructions are similar to last year’s. There are just a few differences:
Changes due to expiration of transition relief.
Some limited transition relief is still in effect for insurance plan years beginning in 2015. However, transition relief related to calendar year 2015 is no longer valid.
- On Form 1094-C, line 22, box B is designated “Reserved.” Qualifying Offer Method Transition Relief is not applicable for 2016.
- Code 1I for Form 1095-C, line 14, and code 2I for Form 1095-C, line 16, are no longer applicable and have been reserved.
New codes for conditional offers of coverage.
Conditional offers are subject to reasonable, objective conditions, such as an offer of coverage from the spouse’s employer.
- 1J – An offer of minimum essential coverage (MEC) providing minimum value (MV) to employee and at least MEC conditionally offered to spouse, no coverage for dependents
- 1K – An offer of MEC providing MV to employee; at least MEC offered to dependents; and at least MEC conditionally offered to spouse.
Affordability safe harbors.
1095-C Line 16 codes 2F, 2G, and 2H, which indicate that an offer of insurance was affordable, can be used only in months where coverage was offered to at least 95% of full time employees. Cross reference the months with Form 1094-C, Part III, column (a). You cannot use the affordability safe harbors during months where you checked the “No” box.
The forms are confusing. What if I make a mistake in the reporting?
As long as you meet the deadlines, the IRS has extended relief from filing penalties for errors made in good faith. This includes incorrect or incomplete information reported on the 1094-C, 1095-C, or statement to employee. According to the IRS, no relief is provided for employers who “cannot show a good faith effort to comply with the information reporting requirements or that fail to timely file an information return or furnish a statement.”
If you don’t meet the deadlines or can’t show good faith effort, filing penalties are steep. A penalty can apply when the employee notice or IRS filing is late or contains errors. The penalty amounts shown below can be doubled if the employer demonstrates “willful neglect.”
|Penalty Type||Provided/Corrected within 30 days of deadline||Through 8/1/17||After 8/1/17|
|Employee notice||$50 per notice|
|$100 per notice|
Maximum $1.5 million
|$250 per notice|
Maximum $3 million
|IRS filing||$50 per return||$100 per return||$250 per return|
Of course, even if you file correctly and on time, you may still be subject to employer shared responsibility assessments, also known as ACA pay-or-play penalties (if your returns show that you didn’t offer adequate insurance to full-time employees and an employee received a tax credit for purchasing insurance). We’ll know more about that as details of any future ACA repeal are published.