Friday, March 31, 2023, is the ACA electronic filing deadline for submitting Forms 1094-C and 1095-C to the IRS for the 2022 tax year as required by the ACA’s Employer Mandate.
Under the ACA’s Employer Mandate, employers with 50 or more full-time employees and full-time equivalent employees, or ALEs must:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
The role of ACA filings
On an annual basis, ALEs must file ACA information to the IRS documenting the health coverage offered for the previous tax year. These ACA filing submissions allow the IRS to identify details pertaining to the healthcare an organization offers, including who received an offer and how much it cost them.
Moreover, the IRS analyzes an organization’s ACA filings against premium tax credit (PTC) information collected from state and federal health exchanges. It’s through this process that the tax agency identifies and assesses instances of ACA non-compliance and subsequently issues Letter 226J.
It follows that the information captured in the annual Forms 1094-C and 1095-C submission is critical, and getting it right is paramount for minimizing IRS penalty risk.
Greater scrutiny this time around
As we previously discussed, 2022 ACA reporting submissions will be reviewed with more rigor than in previous years for a number of reasons. For one, the IRS received a wealth of additional resources, including $80 billion in funding and 87,000 new tax agents. The agency also announced that it has a renewed focus on tax enforcement.
Another reason filing this year will be more difficult than in previous years can be found in the updated IRS final regulations. Late last year the agency confirmed the end of good-faith transition relief, which was intended as a transitional grace period for employers that report incomplete or incorrect information on their ACA filings.
With that good-faith relief no longer available, the expectation is that employers deliver on time and accurate ACA filings going forward. Failing to do so could subject organizations to Letter 972CG IRS penalty assessments. For the 2022 tax year, the penalties issued for organizations with gross receipts exceeding $5 million and government entities can be as high as $570 for every late or inaccurate ACA filing.
Additional ACA responsibilities
March 31, 2023, is not only the ACA electronic filing deadline–it’s also the deadline for many additional state-level ACA reporting requirements. To add a layer of complexity, organizations with operations in California, Massachusetts, New Jersey, and Rhode Island must file their ACA information with each of the aforementioned state governments. Additional penalty assessments can arise for failing to meet these state-mandated deadlines.
Beyond ACA electronic filings under the ACA’s Employer Mandate is the distribution of Form 1095-C to full-time employees and that requirement includes furnishing 1095-Cs to full-time workers employed for one or more months for a given reporting year. The deadline for distributing the 1095-C forms to ACA full-time employees for the 2022 tax year was March 2, 2023.
While it’s true this is the ACA filing season, organizations that offer self-funded health programs are not finished after March 31, 2023. Employers who provide self-funded health coverage to their workforces, as well as health carriers, must also pay the Patient-Centered Outcomes Research Institute (PCORI) fees by July 31, 2023.
ACA electronic filing extension
Organizations that don’t make the ACA electronic filing deadline may be able to file an extension with the IRS via Form 8809.
IRS Form 8809, officially titled Application for Extension of Time to File Information Returns, may grant employers a 30-day auto extension on their ACA Forms 1094-C and 1095-C. Employers should note Form 8809 applications are subject to review and not guaranteed. Be prepared to present a case as to why your organization needs more time to file.
If your business is concerned about meeting the IRS annual ACA electronic filing deadline this year, or the deadlines associated with state reporting, contact Trusaic today to learn about your options. We can file an extension for you and get your filings completed, all while reducing your potential ACA penalty risk.
To evaluate your current ACA compliance process ahead of the upcoming deadline, get your ACA Vitals score below.
Missing an ACA filing or furnishing deadline could land your organization a significant penalty from the IRS. To ensure you never miss one, download the ACA 101 Toolkit, which documents the various federal and state reporting deadlines.