ACA Reporting Deadlines on the Horizon: Are You Ready?– September 24, 2015

The ACA’s information reporting provisions for large employers were optional for 2014 but will be mandatory for the 2015 calendar year for all applicable large employers (ALEs). Smaller employers that are self-insured or part of a “controlled group” ALE will also have reporting obligations.With the deadline approaching, employers should be in full swing of assembling the necessary information. If not, it is time to buckle down and collaborate with your internal team and external advisors to meet the requirements detailed below.

What ALEs Need to Report (and Why)
ALEs, generally those with at least 50 full-time employees or the equivalent, must do two very important things when it comes to reporting for purposes of the ACA:

  1. Report to the IRS information about what health care coverage, if any, you offered to full-time employees. Employers must report this information no later than February 29, 2016, if paper filed — March 31 if filed electronically — for the 2015 calendar year.
  2. Furnish statements to employees so they can determine whether, for each month of the calendar year, they can claim a premium tax credit. The statements must be provided by February 1, 2016, for the 2015 calendar year.

If the information shows that the ALE did either of the things listed below, then the IRS may assess a penalty under the ACA’s employer shared-responsibility provision:

  1. Did not offer “minimum essential” health care coverage to full-time employees (and their dependents).
  2. Offered coverage that was not “affordable” or did not provide at least “minimum value” — and at least one full-time employee received a premium tax credit for purchasing coverage on a Health Insurance Marketplace.

In addition, the IRS will use the information provided to identify individuals who are ineligible for the premium tax credit because they have been offered employer-sponsored coverage that does provide the minimum value.

What About Requirements for Self-Insured and Smaller Employers?
The ACA also requires other groups to report information about all employees, their spouses and dependents who enroll in coverage and to furnish statements to covered employees. Affected groups include:

  • All self-insured employers, even self-insureds not subject to the ACA’s employer shared-responsibility provisions or the ALE reporting requirements. Self-insured ALEs must comply with the insurer requirements in addition to the IRS requirements.
  • Non-ALE employers that are members of a controlled group or treated as one employer for purposes of determining ALE status. These employers must report separately.

The information above generally must be reported by the same deadlines as those for ALEs.

The Price You (May) Pay for Noncompliance
Failure to comply with the information reporting requirements may subject you to the general reporting penalty provisions. Those penalties will increase for information returns and payee (employee) statements filed after December 31, 2015, to the amounts listed below:

Non-Compliance

Penalty

Failure to file an information return

$250 for each return, with a calendar-year maximum of $3 million

Failure to provide a correct payee statement

$250 for each statement, with a calendar-year maximum of $3 million


Special rules apply to increase the per-statement and total penalties in the case of intentional disregard of the requirement to furnish a payee statement. Also, taxpayers with average annual gross receipts of no more than $5 million for the three preceding tax years are subject to lower maximum penalty amounts.

Time is Running Out
While there are alternative simplified methods of reporting available, they are available for very specific situations. Most employers will be held to the requirements above.

Clearly, the wide range of information required will not reside in the system of a single department in your company. You will need the cooperation and collaboration of payroll and HR/benefits specifically. But also collaborating with your internal accountants and your tax advisers is a must to comply on time.

For more detail on how to file Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, read How to File Forms 1094-C and 1095-C for ACA Compliance.

Contact Maura Corrigan at mcorrigan@cohencpa.com to discuss your ACA tax compliance obligations further.

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