The start of the year means more dates for HR teams and employers to remember, including ACA filing deadlines. There is a lot to keep track of in order to remain compliant, especially now that the IRS has permanently revised the deadline for furnishing 1095-C documents to employees. Read on for when ACA reporting documents need to be distributed to employees and filed with the IRS.
Affordable Care Act (ACA) reporting refers to filing the required forms with the IRS and furnishing the forms—providing copies of the forms—to employees.
The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees to offer healthcare coverage to full-time employees or potentially face a fine. The 1095-C form is the government’s way of tracking this, while Form 1094-C acts as a cover sheet for an organization’s collective 1095-Cs. Essentially, the 1095-C’s function is to communicate health insurance information to the IRS. Only Applicable Large Employers (ALEs) are required to file these forms. According to the IRS, an ALE is described as any employer who maintains at least 50 full-time employees. This includes full-time equivalents and is based on the prior year's reporting.
When determining the size of a workforce and whether it amounts to 50 employees or more, you will combine the number of full-time employees and the number of full-time equivalent employees. A full-time equivalent is actually the combination of the hours of different full-time employees or part-time employees, that account for the total number of full-time employees that your organization employs. So if two part-time employees' hours combine for a total that is equivalent to a single full-time employee's hours, they will technically be counted as one single full-time employee.
While the W-2’s main purpose is to communicate payment information to the IRS, the 1095-C’s function is to communicate health insurance information. Similar to the W-2, employees will also need the 1095-C to file personal taxes.
Meanwhile, 1095-Bs are distributed to people who received insurance through small self-funded groups, employers who use the Small Business Health Options Program, or fully-insured employer-sponsored plans.
On October 2, 2020, the IRS announced Notice 2020-76. This extended the deadline to furnish Forms 1095-C and 1095-B from January 31, 2021, to March 02, 2021.
Now, as of November 2021, The IRS has released new proposed regulations, which will permanently extend the deadline for furnishing 1095-C forms by 30 days. The new due date is March 2, moving forward. This deadline is specifically for providing individuals with forms 1095-B and 1095-C.
Also, the filing deadlines were not extended for 2022 Forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS, all of which must be filed by Feb. 28, 2021, or e-filed by March 31, 2021. The term “filing” means submitting the forms to the IRS, either electronically or through the mail.
An ALE that fails to comply with the information reporting requirements may be subject to the general reporting penalty provisions under section 6721 (failure to file correct information returns) and section 6722 (failure to furnish correct payee statement), according to the IRS.
The penalty for failing to file a correct information return is $280 for each incorrect return, with the total penalty for a calendar year not to exceed $3,426,000. The penalty for failing to provide a correct payee statement is $280 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,426,000.
The good-faith effort, which was previously permitted, has now been officially removed. The effort offered a matter of relief to those employers who submitted incomplete or incorrect forms.
With the COVID-19 pandemic still forcing some businesses to operate remotely, it's important to consider your distribution plan for 2022. Acceptable ways to distribute 1095-C forms to your employees include mail, hand delivery (if you're not operating remotely), or email (if prior consent is given).
Once your employees start to receive tax forms, review these questions that they may have regarding Form 1095-C and what to do with it. Additionally, stay on top of important dates and filing requirements using BerniePortal’s comprehensive HR calendar, which is updated regularly as extensions are granted and new deadlines are added.
Employers may also wish to implement an HRIS. Incorporating a system to help generate 1095-C’s can be beneficial for an organization, as It helps ease the many processes relating to document generation and distribution. If an organization is looking to simplify these processes then an HRIS may be the answer.
You can stay informed, educated, and up-to-date with important HR topics using BerniePortal’s comprehensive resources: