It seems like a lot is up in the air with healthcare in America, and many employers are asking about the Affordable Care Act and their responsibilities moving forward. While the current administration - and Congress - continues to make efforts to repeal (and possibly replace) the ACA, the current law remains in place. The IRS is proceeding with ACA reporting for the 2017 tax year with 2018 deadlines, so we want to make sure you're aware of them. Employers should NOT wait to see how things play out in Congress, because the risks of not complying with the current rules and reporting requirements are too high.
Due to employees by Wednesday, January 31, 2018
Form 1095-C helps employees complete their individual tax returns by providing information regarding their health coverage for the previous calendar year. On Line 61 of individual tax returns, employees must show whether theyand/ or their family members had minimum essential coverage.
Employers are responsible for giving their employees a Form 1095-C by Wednesday, January 31, 2018. Employers are still responsible for filing copies of Form 1095-C with the IRS by Wednesday, February 28, 2018 if filing by paper or Monday, April 2, 2018, if filing electronically (same as Form 1094-C).
Employers should report the following on Form 1095-C:
- Proof of minimum essential coverage (MEC)
- Employee ID number
- Social Security Numbers of the employee and his or her dependants (not their spouse)
To IRS via Paper: Wednesday, February 28, 2018
To IRS Electronically: April 2, 2018
Form 1094-C is the proof that Applicable Large Employers (ALEs) did what they should according to the IRS and the Employer Shared Responsibility Mandate.
Under Code sections 6055 and 6056, ALEs must use Form 1094-C to report mandated information about whether or not the employer offered affordable minimum essential health coverage and enrollment in minimum essential health coverage for eligible employees. Form 1094-C transmits forms 1095-C to the IRS.
Some employers have the option to file their ACA reporting by paper or electronically. However, any ALE filing more than 250 of any type of form MUST file ACA information returns electronically. If you will be filing less than 250 forms, you may file by paper, though the IRS encourages electronic filing.
IRS penalties for late or incomplete forms
Failure to file complete and accurate Forms 1094-C may result in penalties up to $260 per form sent to the IRS. Failure to file and furnish correct information on Form 1095-C could result in up to $260 penalty per form sent to the employee AND per form sent to the IRS. Since the same form is sent to the employee and the IRS, that is up to $520 per form. Maximum penalties can total millions of dollars.
Next steps for employers
Forms 1094 and 1095 can require information from multiple systems of record for one annual filing. So employers need to gather tracked information from HR, payroll, benefits, and other sources. Waiting until the beginning of 2018 to act on ACA tracking and reporting could leave your company facing steep financial penalties.
Here are some tips to get a head start on ACA reporting in 2018...
- Figure out if your business qualifies as an Applicable Large Employer (ALE).
- Make sure the right systems are in place for accurate ACA reportiong for your business.
- Review the IRS reporting information page for Form 1094 and Form 1095.
Complete Payroll has many ACA Subject Matter Experts (SMEs), and we've helped thousands of businesses with their ACA filings and reporting requirements in recent years. Check out our free ACA Toolbox for more helpful resources for Applicable Large Employers.