Business And Management

Demystifying ACA Reporting: What Employers Need to Know

by Henry Chatman

Image Source: Google

As an employer, understanding the Affordable Care Act (ACA) reporting requirements is crucial to ensure compliance and avoid penalties. The ACA includes provisions that require certain employers to provide information about the health coverage they offer to their employees. This information is used by the IRS to verify compliance with the ACA's employer mandate and individual mandate. In this article, we will demystify ACA reporting and provide you with essential information to help you navigate through the requirements.

Who Needs to Report?

Employers Subject to the ACA Reporting Requirements

  • Large employers with 50 or more full-time equivalent employees
  • Self-insured employers of any size

Minimum Essential Coverage Reporting

  • Employers offering self-insured health coverage
  • Insurance companies providing fully insured health coverage

Key Reporting Forms

Form 1095-C

  • Used by applicable large employers to report information about health coverage offered to full-time employees
  • Details employee enrollment, cost, and coverage periods

Form 1094-C

  • Transmittal form that accompanies Form 1095-C
  • Summarizes employer-provided health coverage information

Reporting Deadlines

Deadlines for Providing Forms to Employees

  • Form 1095-C must be provided to employees by January 31st
  • Applicable large employers must also file copies with the IRS by February 28th (paper filing) or March 31st (electronic filing)

Penalties for Noncompliance

  • Failure to file correct information results in penalties of $260 per return (with a maximum penalty of $3,218,500)
  • Intentional disregard of the filing requirements incurs penalties of $530 per return with no maximum penalty

Common Mistakes to Avoid

Failure to File on Time

  • Missing deadlines for providing forms to employees and filing with the IRS can result in penalties

Inaccurate or Incomplete Information

  • Ensure all information reported on Forms 1094-C and 1095-C is accurate and complete to avoid penalties

Ignoring ACA Reporting Requirements

  • Noncompliance with ACA reporting requirements can lead to significant penalties and legal consequences

Best Practices for ACA Reporting

Start Early

  • Begin collecting and reviewing the necessary information well in advance of the reporting deadlines

Use Reliable Software

  • Consider using ACA reporting software to streamline the reporting process and reduce the risk of errors

Seek Professional Assistance

  • Consult with tax professionals or ACA reporting experts to ensure compliance with the requirements

Conclusion

Demystifying ACA reporting is essential for employers to fulfill their obligations under the Affordable Care Act. By understanding who needs to report, key reporting forms, deadlines, penalties for noncompliance, common mistakes to avoid, and best practices for ACA reporting, employers can navigate through the requirements with ease. Remember that compliance with ACA reporting requirements is crucial to avoid penalties and ensure the smooth operation of your business.