As 2024 approaches, now is the time to begin preparing for the 2023 ACA reporting requirements.
To assist you with your ACA responsibilities, we’ve curated a list of some of the most common ACA reporting questions and answers heading into 2024. We hope you find these to be helpful and if you have a question that’s not addressed below, please contact Trusaic.
What type of organization must comply with the ACA’s Employer Mandate?
Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs) must offer affordable Minimum Essential Coverage that also meets Minimum Value to their full-time and full-time equivalent employees. Failing to meet both of these requirements can result in Section 4980H(a) and 4980H(b) penalties, which the IRS issues via Letter 226J.
What are the 2023 ACA filing options?
Like in previous years, organizations have the ability to paper file or electronically submit their 2023 ACA information to the IRS–with one caveat. ALEs may only paper file their ACA information for the 2023 tax year if they have 10 or fewer 1095-C forms.
In the past, organizations could file up to 200 paper filings, but the threshold has been greatly reduced to encourage electronic submission, thanks to new legislation that passed earlier this year.
The thinking behind this is that electronic submissions are easier to review, process, and record. With this increased visibility, the IRS can more quickly identify and confirm organizational ACA compliance.
How will leap year impact ACA reporting in 2024?
It may seem like a negligible detail, but the extra day in February actually changes the deadline for furnishing ACA 1095-C forms to full-time employees.
Historically, the deadline for distributing the 1095-Cs to employees was January 31, but the IRS always issued a 30-day extension, giving employers another month to distribute. Late last year, the agency issued regulations that made the 30-day extension permanent, moving the deadline to March 2 each year.
However, because 2024 is a leap year, the extra day in February moves the deadline for furnishing ACA information to full-time employees Friday, March 1, 2024, instead of March 2.
Keeping track of these changing deadlines and new IRS regulations can be challenging. If your organization needs assistance managing the 2024 ACA reporting deadlines, contact Trusaic to learn about the benefits of ACA Complete.
Which employees require a 1095-C form?
ALEs are only required to furnish 1095-C forms to their ACA full-time employees. The same is true for reporting to the IRS and most state governments. Oftentimes, employers over-report their ACA information and include non-full-time employees who don’t need a 1095-C form. The challenge with overreporting is that it puts businesses at greater risk of receiving an ACA penalty.
In fact, a research report recently conducted by Trusaic found overreporting as a common reason for why organizations receive ACA penalty assessments from the IRS. So if you want to avoid penalties and minimize the amount of time you spend each year preparing ACA filings, be sure to only report on your ACA full-time staff.
The only exception to this rule is if your organization offers a self-insured health plan. ALEs with self-funded plans must 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.
What is the TIN Error Reconciliation Process?
By now it’s become clear that simply submitting your ACA information to the IRS does not absolve you of your responsibilities. The filings need to contain accurate information and if they don’t the IRS will let you know via the Taxpayer Identification Number (TIN) error reconciliation process.
The TIN error reconciliation process is simple in concept and works by notifying organizations of employee TIN errors found in the submitted 1095-C forms. For example, the system may indicate that an employer’s ACA filing was “accepted with errors,” and in response provide a list to the organization containing all of the employees who had TIN error.
TIN errors typically occur when there is a mismatch in an employee’s legal name and social security number (i.e., TIN).
If you receive a list following an electronic ACA filing submission, you should cross-reference it with your HR/payroll records, which may be out of date. 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 filing corrections to SSN or name errors alone without any corrections to the amounts identified in the 1095-C.
Employers should engage in the TIN solicitation process to verify names and social security numbers (SSNs) are up to date. Organizations filing 1095-C forms that contain incorrect TINs will not be subject to penalties if they comply with the TIN solicitation requirements. Failing to comply with the TIN requirements could receive a Letter 972CG or Letter 5005-A from the IRS.
What Documentation is Required for ACA Reporting?
When completing your ACA reporting each year, the first things that come to mind are the 1094-C and 1095-C forms. And for good reason as these IRS forms include highly important information regarding your health plans for a specific tax year. But ACA reporting documentation doesn’t end there.
In the event of an IRS inquiry, you’re going to want as much ACA information as possible. As such, organizations are encouraged to retain documents such as physical or electronic offers of coverage and important plan information, like Summaries of Benefits of Coverage and Enrollment Guides, Employee Handbooks, Summary Plan Documents, Employee Premium Rate Sheets, and Acknowledgment 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. The same is true for calculating ACA affordability, which continues to decrease.
Get Help with ACA Compliance
As you prepare for the 2023 ACA reporting season, to be completed in 2024, be sure to keep this information top of mind. Failing to comply with the ACA can be costly for your business and the IRS is currently ramping up ACA enforcement efforts.
Trusaic can 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 solution handles everything for you.
We hope that the information above proves helpful as you prepare for 2023 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 can help you identify potential penalty risk areas within your organization so that you can take any necessary precautions to protect your business.
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.