Affordable Care Act

ACA Reporting must also be completed by employers who average less than 50 FT/FTE employees but are self-insured or level-funded. This is because the IRS considers the employer as the insurer and therefore the 1094/1095 B Forms must be submitted each year to show which employee and each of their dependents were covered by health insurance the year prior.

1094-C and 1095-C: Employers with 50+ employees will need to use these forms to report both fully insured and self-insured plans. Once completed for each employee, they must be submitted to the IRS using submittal form 1094-C.

1094-B and 1095-B: Employers with fewer than 50 employees who provide employer-sponsored self-insured health coverage will use forms 1094 & 1095-B. Click here for 1094-B and 1095-B IRS instructions.

ALEs also are subject to the employer shared responsibility payment provisions. You may have to make a shared responsibility payment if at least one full-time employee receives the premium tax credit for purchasing individual coverage through the Health Insurance Marketplace and you:

• • failed to offer coverage to at least 95 percent of full-time employees and their dependents, or
  • offered coverage to at least 95 percent of full-time employees but not to the particular full-time employee receiving the credit (one of the 5 percent), or
  • offered coverage that was not affordable, or 
  • offered coverage that did not provide a minimum level of coverage.

For the 2020 reporting year, Forms 1095-B or 1095-C are required to be printed and mailed to employees no later than Mar 2, 2020. These forms are required to be filed with the IRS by March 1st, 2021(if paper filing) or by March 31, 2021 (if transmitting electronically.

The critical 2020 filing deadlines for 2019 coverage are January 31st. Paper filing with the IRS is February 28 and Electronic filing with IRS is March 31st. As in the past, the IRS has extended the Jan. 31 deadlines by 30 days, in Notice 2019-63. Although the IRS has extended the Jan. 31 deadlines to furnish ACA reporting forms to employees by 30 days, employers may still decide to distribute 1095 forms to employees in January along with employees' W-2 earnings statements.

"The IRS will not grant an additional 30-day extension beyond this deadline,"

Employers may still decide to distribute 1095 forms to employees in January along with employees' W-2 earnings statements. "The IRS will not grant an additional 30-day extension beyond this deadline." Reporting entities may, however, request individual extensions to file these forms with the IRS. Even with the automatic extension for distributing forms, "the IRS specifically encouraged employers and other coverage providers to send the forms to employees and individuals as soon as possible."

Notice 2018-94 PDF, also extends transition relief from certain penalties (IRC Sections 6721 and 6722) to providers and employers that can show that they have made good-faith efforts to comply with the information-reporting requirements for 2018 for incorrect or incomplete information reported on the return or statement.

Employers can expect higher penalties for ACA violations,  for being late, misfiling's, and not properly providing coverage. 

The IRS has begun "aggressive enforcement of the ACA," sending out Letter 226J penalty notices for noncompliance with the employer's shared responsibility payment provision. The Department of Health and Human Services issued the 2020 Notice of Benefit and Payment Parameters final rule in April 2019, and based on the inflation-adjustment factor in the final rule, compliance advisers project that the ACA 2020 penalty amounts, adjusted annually from the initial penalties set in 2014, will be as follows:

Section 4980H(a) penalty is expected to increase from $2,320 per employee to $2,500 per employee. This penalty is imposed on employers who fail to offer full-time employees and their dependent children the opportunity to enroll in minimum essential coverage sponsored by the employer if at least one full-time employee obtains a premium tax credit for insurance purchased through an ACA marketplace exchange.

The Section 4980H(b) penalty is expected to increase from $3,480 per employee to $3,750 per employee. This penalty is imposed on employers whose plan fails to meet the affordability and minimum value requirements.

The general ACA reporting penalties are $280 for the late/incorrect Forms 1095-C furnished to employees and $280 for the late/incorrect Forms 1094-C and 1095-C filed with the IRS. That comes to a total potential general penalty of $560 per employee, but exceptions may apply.

The Maximum Penalty for a calendar year will not exceed $3,392,000 for late/incorrect furnishing or filing.

Reduced Penalties for Short Duration Failures

The IRS reduces that general Penalty if the late/corrected forms are furnished/filed in specific periods:

• 30-Day Correction: If corrected within 30 days of the due date, the per-return Penalty is $50 (capped at $565,000).
• August 1 Correction: If corrected by August 1, the per-return penalty is $110 (capped at $1,696,000).

Please reference: https://www.hrserviceinc.com/affordable-care-act-updates/

https://www.hrserviceinc.com/how-to-appeal-irs-aca-letters/