The end of the year is officially here and with it, a whirlwind of ACA responsibilities to tend to for the upcoming filing season.
To assist you with your ACA responsibilities, we’ve curated a list of the most common ACA filing questions and answers. We hope you find these to be helpful as you head into the 2022 tax season and prepare your ACA filings with the IRS and state governments.
What type of organization must comply with the ACA’s Employer Mandate?
Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs) which are employers with 50 or more full-time and full-time equivalent employees must:
- Offer Minimum Essential Coverage to at least 95% of their full-time employees and their dependents whereby such coverage meets Minimum Value
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
Do only ACA full-time employees require a 1095-C?
Yes. ALEs are required to furnish to their ACA full-time employees a 1095-C Form. The same goes for filing to the IRS and most state governments. Oftentimes, employers over-report their ACA information and include employees that didn’t need a 1095-C form. The challenge with overreporting is that it can subject your business to greater ACA penalty risk from the tax agency.
If an employer offers a self-insured health plan, the ALE must also report on all individuals who enrolled in the self-insured health plan, including non-full-time employees and non-employee individuals, such as spouses and dependents.
Need assistance with ACA filing and furnishing? Contact us to learn about our suite of ACA solutions.
What is the TIN Error Reconciliation Process?
The Taxpayer Identification Number (TIN) error reconciliation process is a system that addresses TIN errors. For example, if the IRS Affordable Care Act Information Returns (AIRS) system indicates that an employer’s filing is “accepted with errors,” a list is provided containing all of the employees with respect to whom a TIN error was noted.
This typically occurs due to mismatches in the legal names and social security numbers (i.e., TIN) of those employees. This list should be cross-referenced with the employer’s HR/payroll records, which may be out of date.
Employers should be engaging in the TIN solicitation process to ensure names or social security numbers (SSNs) are up to date. Employers filing 1095-C forms that contain incorrect TINs will not be subject to penalties if they comply with the TIN solicitation requirements. The IRS is currently issuing late filing penalties to employers via Letter 972CG and Letter 5005-A to employees that fail to file altogether.
Once you correct the employee names and SSNs, be sure to use the corrected information for future 1095-C filings. Failing to do so could create future ACA filing issues. Please note that the IRS does not require the filing of corrections to SSN or name errors alone without any corrections to the amounts identified in the 1095-C.
What kind of documentation is necessary for substantiating ACA reporting?
Supporting documentation includes items such as offers of coverage and important plan information which can be found in Summaries of Benefits of Coverage and Enrollment Guides, Employee Handbook, Summary Plan Documents, Employee Premium Rate Sheets, and/or Acknowledgement of Offer of Coverage.
If the question is specifically focused on payroll, supporting documentation could be a spreadsheet on which relevant payroll data was downloaded for use in determining full-time employee status.
When in doubt, hang onto any physical or digital information that communicates health plan information and employee offers of coverage. The IRS is ramping up ACA enforcement efforts and employers should retain all relevant documentation in the event of an inquiry. Trusaic will handle the documentation retention process for you, as well as prepare a defense in the event of any IRS inquiry. In fact, our ACA Complete and Enterprise solutions handle everything for you.
We hope that the information above proves helpful as you prepare for 2022 ACA filings. If you’re unsure of your current ACA compliance status, we invite you to get your ACA Vitals. This self-assessment eight-question quiz will identify any potential penalty risk areas so that you can proceed accordingly.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.