2020 ACA REPORTING
Year-end processing is quickly approaching, and with it comes the burden of Affordable Care Act (ACA) reporting. With so much information to gather, review, and account, ACA reporting can be a very stressful process. How prepared is your company for upcoming ACA reporting? We’ll use this article to discuss ACA reporting requirements for 2020 and information you can use to get compliant this season.
ACA Reporting Basics
What Is ACA Reporting?
ACA reporting refers to the information and forms employers have to gather concerning their employees’ health care coverage during the calendar year. The different types of forms needed to meet ACA reporting requirements for 2020 include:
- Form 1095-A: This is for individuals who buy their health insurance through the marketplace.
- Form 1095-B: This is for employers who offer a self-funded insurance plan to their employees.
- Form 1095-C: This for Applicable Large Employers who offer group health plans to individuals considered full-time employees by the ACA in the previous calendar year.
To meet ACA compliance reporting requirements, employers must file the gathered information to the Internal Revenue Service (IRS) by the filing deadline and sending copies to employees.
Who Is Required To Do ACA Reporting?
Individuals enrolled in the marketplace, employers who sponsor self-insured coverage, and applicable large employers must file with the IRS. However, ACA 1095 reporting requirements vary depending on the type of coverage offered.
Individuals who enroll in qualified health plans within the marketplace are required to file Form 1095-A.
Employers that offer employer-sponsored self-insured health coverage are required to file Form 1095-B. A self-funded plan like this is when an employer pays for healthcare expenses out of pocket as they are received. Though smaller businesses usually offer this, several larger organizations have adopted this insurance model recently.
Employees with 50 or more full-time employees (including full-time equivalent employees) within the previous year must file Form 1095-C. These employers file Form 1095-C because they select and purchase health plans on behalf of their employees and must meet minimum essential requirements to offer those plans.
NOTE: Self-insured companies with 50 or more full-time employees are required to combine 1095-B and 1095-C information into a single 1095-C form. They are also required to send covered workers copies of both their 1095-C and 1095 B forms.
What Is ACA Filing?
ACA filing is the process of submitting the information gathered from health reporting to the IRS. There is a variety of information included in these reports, such as but not limited to:
- Employer identification numbers (EIN)
- Taxpayer identification numbers (TIN)
- Employee dependents
- Employee addresses
- Employee and dependent months of coverage
ACA year-end reporting requirements mandate employers to send the information above in the form of returns to the IRS. Employers must also provide copies of the documents to employees, as part of their ACA employer reporting requirements.
Will ACA Reporting Be Required in 2021?
Yes, employers must handle ACA reporting in 2021 for the 2020 tax season. The IRS recently released a draft form of document 1095-C. They have also posted deadlines for information filing with the IRS in 2021.
What Is An Applicable Large Employer?
An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees. ALE’s consist of multiple organizations grouped or a single organization.
What’s an Aggregated ALE Group?
An Aggregated ALE Group is a group of ALE members common owner that are generally combined and treated as a single employer for ACA ALE reporting requirements. Each company is an ALE member, while the group of ALE members is an Aggregated ALE Group.
- Corporation X owns 100 percent of all classes of stock of Corporation Y and Corporation Z.
- Corporation X has no employees at any time in 2019.
- For every calendar month in 2019, Corporation Y has 40 full-time employees, and Corporation Z has 60 full-time employees. Neither Corporation Y nor Corporation Z has any full-time equivalent employees.
- Corporations X, Y, and Z are considered a controlled group of corporations and are aggregated to determine ALE status.
- Because Corporations X, Y, and Z have a combined total of 100 full-time employees for each month during 2019, Corporations X, Y, and Z together are an ALE for 2020.
- Corporation Y and Z are each an ALE member for 2019.
- Corporation X is not an ALE member for 2020 because it does not have any employees during 2019.
Employers with a common owner or that are otherwise related are generally combined and treated as a single employer to determine whether an employer is an ALE. However, potential liability under the employer shared responsibility provisions is determined separately for each ALE member.
Minimum essential coverage is the mandatory coverage that employers have to offer enrollees regardless of their health status or plan type. To comply with Affordable Care Act requirements, employers offer minimum essential coverage in the form of essential health benefits (EHBs). Every health plan must include the following 10 EHBs:
- Laboratory services
- Emergency services
- Prescription drugs
- Mental health/substance abuse
- Maternity and newborn care
- Pediatrics services, including oral and vision care
- Rehabilitative and habilitative services and devices
- Ambulatory patient services
- Preventive/wellness services and chronic disease management
Source: Minimum Essential Health Plans: 10 Things Your Plan Will Cover
Employers must help pay for a portion of each of these EHBs to meet the requirements for minimum essential coverage.
ACA reporting deadlines for 2020:
|March 2, 2021||Supply Forms 1095-C to employees.|
|February 28, 2021||File paper Forms 1095-C with transmittal Form 1094-C.|
|March 31, 2021||e-File Forms 1095-C with transmittal Form 1094-C.|
ACA 1094 and 1095 Reporting Requirements
ACA tracking and reporting requirements can be stressful if you don’t understand how they work. Form 1095-C reports information about individuals, while Form 1094-C transmits that information and employer data to the IRS.
Multiple forms can be confusing when it’s your first time handling ACA reporting compliance for your employer. Luckily, we’ve broken down the different parts of 1095-C and 1094-C so you can get compliant quickly and efficiently.
Preparing Forms 1095-C
Form 1095-C is the employer-provided health insurance coverage and offer form. It reports information about each employee, and it consists of two parts:
- Part I Employee and Applicable Large Employer Member (Employer): Provide general employee and employer information such as names and addresses.
- Part II Employee Offer of Coverage
- Indicate the type of coverage offered, if any, using the provided IRS codes,
- the lowest cost monthly premium for the employee, and
- the applicable safe harbor codes.
ACA Reporting Tip
Employers must furnish Form 1095-C to the employee only. Employees should provide a copy of this form to any family members covered under the self-insured, employer-sponsored plan listed in Part lll.
Preparing Forms 1094-C
Form 1094-C s a combination of employee and employer reporting. This form reports a summary of health coverage and offers for each employer to the IRS. It also transmits Forms 1095-C to the IRS. It consists of four parts:
Part I Applicable Large Employer Member (ALE Member)
In Part I, you will provide general employer data such as name and address. You will also provide the total number of Forms 1095-C submitted, and if it is an authoritative transmittal.
Part II ALE Member Information
In Part II, you will enter the total number of forms filed on behalf of the ALE Member. You will also indicate if the ALE Member is a member of an Aggregated ALE Group. Finally, you will specify any certifications of eligibility that apply (i.e., Qualifying Offer Method).
Part III ALE Member Information - Monthly
In Part III, indicate if you offered minimum essential coverage and the full-time employee count for the ALE Member. You will also enter the total employee count and the months the ALE was a member of an aggregated ALE group.
Part IV Other Members of Aggregated ALE Group
In Part IV, you will enter the names and EINs of other ALE Members of the Aggregated ALE Group (if applicable).
Perform an ACA Audit
Run an audit on your past 1094-C and 1095-C filings during the summer for better year-end preparation. Performing an inspection can catch any errors in previous filings. An audit ensures your organization won’t be duplicating last year’s mistakes before ACA reporting officially begins. Auditing saves your organization time and stress by proactively fixing any errors to avoid penalties.
Proactively Check for Errors
The IRS requires that employee information on Forms W-2 and Form 1095-C match their social security cards.
If an employee has a hyphenated last name on their social security card but not on their Form W-2 or Form 1095-C, the IRS will count this as an error.
Obtain Taxpayer Identification Numbers (TIN) and correct any other information now by checking your employee records. You may also use a provider that offers an error-checking algorithm to automate the process.
Watch for IRS Penalties
The penalties for failure to file complete, accurate Forms 1095-C and related forms by the March 31st deadline are up to $270 per return. If the IRS determines that failure to file was intentional, the penalty is $550 per return.
Be Aware of ACA Reporting Extensions
If you plan to file for an ACA reporting extension, make sure you set a deadline that gives you ample time to apply. Submit Form 8809 on or before the due date of the return for an extension.
Review Your ACA Strategy
If your company is subject to the Employer Mandate, start reviewing your current ACA strategy. Then, determine what method of section 6056 reporting you plan to use. In order to meet ACA reporting requirements in 2020 and in the years following, it’s crucial to approach it with a team effort, aligning HR, finance, and your company’s accountant or tax advisor.
Using a system that accurately tracks and records coverage provided for full-time employees every month will better prepare you for year-end processing. When reviewing your current ACA strategy, consider the following:
Do you have systems in place to accurately track and manage ACA compliance, including employee statuses, benefits administration, and variable hour employee tracking?
Work With An ACA Compliance Reporting Parnter
If your company is looking to partner with a trustworthy provider, it’s essential to look at the software company’s ACA compliance and reporting services. When vetting payroll and HR providers, review the features and benefits their solutions provide. Make sure their solutions will best fit your needs and will work with your compliance strategy. Find out if the vendor offers the following ACA services:
Management of marketplace notices to employees.
Reporting to decide which employees are eligible for health coverage.
How APS Can Help With ACA Reporting
APS offers ACA compliance and reporting services that make this complex requirement easier. makes it simple to populate and complete Forms 1095-C. Our error-checking algorithm ensures codes are valid, and data is formatted correctly for reporting.
Our four-step guided reporting process accurately captures and reports health plan coverage information to the IRS with pre-populated forms. We provide a worry-free way to meet ACA reporting requirements for 2020 and avoid penalties. We’ll even e-file with the IRS on your behalf.
2020 Instructions for Form 1094-B and 1095-B
Does Your Company Need To File Form 1095-B
Employer Shared Responsibility Provisions
Increase in Information Return Penalties
Minimum Essential Coverage: 10 Things Your Plan Will Cover
The IRS’ 1095 Forms for ACA Explained
Determining in an Employer is an Applicable Large Employer
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