The IRS has issued the final ACA reporting instructions for the 2024 tax year, which include both the 1094-C and 1095-C forms to be filed and furnished in 2025.
There are no changes to the previous year’s requirements, but there is a new way to tackle ACA compliance with Trusaic. This blog will dive into what your file and furnishing obligations are, and how they can be simplified with software.
Automate 1095-C Electronic Form Distribution
The instructions confirm an automatic 30-day extension for furnishing forms 1095-C to required individuals. That means Applicable Large Employers (ALEs) have until March 3, 2025 to distribute 1095-C forms to their full-time employees. These forms must be furnished by paper mail or hand-delivered unless the recipient agrees in advance to receive a copy electronically.
Organizations that would prefer to send forms electronically can do so with ease utilizing Trusaic’s platform. Our new electronic distribution feature for 1095-C forms simplifies the process.
The ACA Complete software feature allows you to electronically furnish forms to employees who can then access them in our platform. This ensures all your forms are distributed on-time and can be easily tracked for compliance purposes.
What was previously a tedious, time-consuming process is now streamlined for efficiency and accuracy.
Want to learn more about how to access this new option in our ACA Complete service?
Reviewing Line 14 Codes
The IRS introduced new codes for Line 14 of Form 1095-C in 2022. Employers should take note of the relatively new 1T and 1U codes.
The 1T and 1U codes were first introduced for 2021 reporting and relate specifically to the use of Health Reimbursement Arrangement (HRA) offers of coverage. See below for an explanation of these codes.
- What is the 1T code? ALEs should enter a 1T code on line 14 of the 1095-C form if an Individual coverage HRA was offered to employee and spouse (not dependents) with affordability determined using employee’s primary residence location ZIP code.
- What is the 1U code? Similar to the 1T code, the 1U code also relates to HRA offers of coverage. ALEs should code the 1U on Line 14 of the 1095-C form if an Individual coverage HRA was offered to employee and spouse (not dependents) using employee’s primary employment site ZIP code affordability safe harbor
Both codes should be used in the event of an offer to the employee and their spouse, and not in the event of an offer to employee, spouse and dependents (1N and 1O).
Avoid Errors: Trust Trusaic This Filing Season
Although ACA compliance obligations remain unchanged from the previous year, IRS enforcement has increased. The IRS received an additional $80 billion in funding. The IRS recently began issuing 2022 non-compliance penalties via Letter 226J, after starting with 2021 penalties in January of this year.
Thus, getting your ACA information in with the tax agency on time and accurately will be paramount for avoiding penalties. Reporting errors are common with ACA Compliance. Our research indicated that from 2015 through 2018 the most common root cause was an error on the 1094-C form.
Form 1095-C coding errors, as a proportion of all (simplified) root causes, have been rising throughout the years 2015 to 2019. For the first time, in 2019, 1095-C errors were more frequent than 1094-C errors.
These avoidable errors lead to costly IRS penalties. If your organization is tired of managing the ongoing challenges associated with ACA compliance, outsource it to Trusaic. With our suite of full-service enterprise-grade ACA solutions, we can handle all of the responsibilities for you.
Contact Us today or Schedule Demo to get started.
