Each year-end, employers will need to be mindful of several deadlines in the first weeks and months of the new year. For applicable large employers (ALEs) or small employers who offer self-insured group health plans, reporting under the Affordable Care Act (ACA) is one such deadline.
A general understanding of the ACA requirements is that employers and health insurance issuers provide forms to employees and submit filings to the IRS detailing offers of coverage during the year. The deadline to distribute applicable forms to employees is January 31st and employers must file appropriate forms with the IRS by February 28th if using paper forms or by March 31st if filing electronically.
For the past several years, the IRS has issued extensions for distributing forms to employees and this year is no different. Current proposed regulations will permanently extend the deadline to supply applicable Forms 1095-B or 1095-C to employees to 30 days following January 31st (i.e., March 2 for reporting year 2021). Because this extension is automatic, employers do not need to request an extension for good cause or submit Form 8809 on the original due date for the automatic extension. While the regulations are not finalized, employers may rely on them for this year’s filing.
In previous years, the IRS also provided transitional relief for employers that could show that they made good faith efforts to comply with the information reporting requirements. When it comes to calendar year 2021 reporting, this relief no longer applies, and the IRS will no longer provide relief from penalties to reporting entities that report incorrect or incomplete information on Form 1094 or 1095.
To ensure you remain compliant with the ACA, employers and service providers should be prepared to provide the necessary health care reporting forms to employees to meet the filing deadlines that take place in early 2022.
For ease, below we provide a refresher on the Act, outline important dates, and provide additional resources to ensure you stay in compliance for 2021.
An Overview of the Affordable Care Act
The Affordable Care Act (ACA) is a health care reform law that was enacted in March 2010. The goal of this act was to make affordable health insurance available to more people, expand the Medicaid program, and support medical care delivery methods to lower the cost of health care generally. For employers, it contains many responsibilities and benefits depending on the size and structure of your workforce. The size of your workforce depends on how many full-time employees, including full-time equivalents, you employ at your business.
The employer mandate requires ALEs to offer coverage to their employees that is affordable and provides minimum value. An employer is considered an ALE when they have 50 or more full-time, including full-time equivalent, employees on average during the previous calendar year.a
ACA Requirements, Deadlines & Forms
For insurance carriers and small employers that self-insure, Code §6055 requires health insurance providers of minimum essential coverage to an individual during a calendar year to confirm certain coverage information to the IRS and to covered individuals.
Each covered individual receives a Form 1095-B from their health insurance provider to report their coverage. The health insurance provider must also send copies of all Forms 1095-B it has mailed to covered consumers to the IRS. In addition to sending Form 1095-B to covered individuals and the IRS, the insurance provider must also provide a transmittal form, or cover sheet, called Form 1094-B.
For ALEs, Code §6056 requires ALEs to report to the IRS whether they offer their full-time employees and their employees’ dependents the opportunity to enroll in minimum essential coverage under an employer-sponsored plan.
ALEs utilize Form 1095-C to detail information on the health insurance coverage offered and the months of the year when such coverage was accessible to all eligible employees (not just participating employees) for their group health plan. In addition to sending Form 1095-C to eligible employees, copies must also be submitted to the IRS. ALEs must also send a transmittal form, or cover sheet, which is Form 1094-C.
We have noted some differences between Forms 1094 and 1095 to help you understand how they are unique.
The IRS sets several deadlines for these forms. Employers should keep the following dates in mind for furnishing the appropriate forms:
*IRS proposed regulations provide an automatic extension of time to provide individual statements about such coverage.
The proposed guidance also provides for an alternative method to furnish forms 1095-B to individuals for any year in which the shared responsibility amount is $0. Employers required to provide Forms 1095-B to employees (e.g., small employers with self-insured group health coverage) can satisfy the requirements by posting a conspicuous notice on their website stating that the individuals may receive a copy of their statement upon request.
Also important to note, if an ALE files 250 or more information returns in a given year, the returns must be filed electronically. Proposed guidance may lower this threshold (see below), however, the instructions for 2022 retain the 250 information return threshold.
Update Regarding Threshold to E-File
A new IRS proposed regulation aims to eliminate the paper filing option by 2023, leaving it in place for only a small percentage of businesses. Using a phase-out approach, the proposed rule intends to reduce “the electronic filing threshold for information returns covered under §301.6011-2(b) from 250 to 100, for returns required to be filed during calendar year 2022, and from 100 to 10, for returns required to be filed during calendar years after 2022.”
As stated in the proposed rule, “The Treasury Department and the IRS expect that by calendar year 2023 the IRS will be prepared to handle and process the anticipated increased volume of returns and applications and that no further incremental step-down would be necessary if these proposed regulations are finalized and applicable to returns required to be filed during calendar year 2023.” This proposed guidance would also require that the threshold apply to aggregated forms information returns covered under §301.6011-2(b); the threshold for each of these returns is currently counted separately. Until further notice, E-Filing thresholds remain unchanged.
The bottom line.
Meeting external deadlines can be challenging. Partnering with a payroll and Human Capital Management (HCM) provider can help you ensure deadlines are met, compliance requirements are fulfilled, and challenges are mitigated.
How PrimePay can help ensure compliance.
Our ACA Compliance Navigator solution helps with variable hour employees, file and provide IRS Forms 1094/1095, and provides penalty exposure warnings, checklists, and more. Contact our ACA team at 877-479-2996 for more information or connect with a Sales Team Member by clicking below.
Please read our disclaimer here.