September, 2020

How to Prepare for ACA Reporting

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How to Prepare for 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 report, ACA reporting can be a very stressful process. How prepared is your company for upcoming ACA reporting? In this article, we’ll discuss the employer mandate requirements for ACA reporting and how you can better prepare this season.

Common ACA FAQs

What Is ACA Reporting?

ACA reporting refers to the information and forms employers have to gather concerning health care coverage they offered their employees during the calendar year. Employers who are applicable large employers (ALEs) are subject to ACA reporting under the Employer Mandate.

Who Has To Report To ACA?

Organizations with 50 or more full-time employees (including full-time equivalent employees) within the previous year, must report healthcare coverage to the IRS. Regardless of their size, self-insured employers must also report healthcare coverage to the IRS.

What Is ACA Filing?

ACA filing is the process of filing the information gathered from health reporting to the IRS. The IRS requires employers to send this information in the form of annual information returns and provide copies of the documents to employees.

Will ACA Reporting Be Required In 2021?

Yes, ACA reporting is still required in 2021 for the 2020 tax season. The IRS recently released a draft form of reporting document 1095-C. They have also posted deadlines for when the information will need to be filed with the IRS in 2021.

What’s an Aggregated ALE Group?

Companies with a common owner are generally combined and treated as a single employer for determining ALE status. Each company is referred to as an ALE member and the group of ALE members is referred to as an Aggregated ALE Group.

What’s Minimum Essential Coverage?

This is health insurance coverage that employers have to have to comply with Affordable Care Act requirements.

What Is an Applicable Large Employer?

An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees. This can consist of multiple organizations grouped together, or a single organization.

ACA reporting deadlines for 2020:

Due DateDeadline
January 31, 2021Supply Forms 1095-C to employees.
February 28, 2021File paper Forms 1095-C with transmittal Form 1094-C.
March 31, 2021e-File Forms 1095-C with transmittal Form 1094-C.
*These dates are subject to change. In the past, the IRS has extended the Jan. 31 deadline by 30 days.
Source: IRS.

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:<[/et_pb_text][/et_pb_column][/et_pb_row]

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.

Form 1095-C Part !

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).

Form 1095-C Part II

Part III ALE Member Information - Monthly

In Part III, you will indicate if minimum essential coverage was offered, as well as 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.

Form 1095-C Part III

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).

Form 1095-C Part IV
How to Prepare for ACA Reporting, ACA Compliance Guide

Tips for ACA Reporting

Tips for ACA Reporting

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.

This will ensure 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.

Tips for ACA Reporting

Proactively Check for Errors

The IRS requires that employee information on Forms W-2 and Form 1095-C match their social security cards.

For Example:

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

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

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. It’s crucial to approach ACA reporting 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:

Employer Mandate
Does your organization qualify as an ALE according to the guidelines of the Employer Mandate?
ACA compliance

Do you have systems in place to accurately track and manage ACA compliance, including employee statuses, benefits administration, and variable hour employee tracking?

ACA reporting
What reporting method works best for your organization?
ACA reporting
Have you recently reviewed the IRS page on ACA reporting to ensure you’re up to date on reporting guidelines?

Prepare with a Partner

If your company is looking to partner with a trustworthy provider, it’s essential to look at the ACA compliance and reporting services offered. When vetting payroll and HR providers, review the features and benefits their solutions offer. Make sure their solutions will best fit your needs and will work with your compliance strategy. Find out if the vendor provides the following ACA services:

Form W-2
Automatic reporting of employer-sponsored coverage amounts on Form W-2s.
applicable large employer
A full-time equivalent calculation to determine if your organization is an applicable large employer.
partner marketplace
Management of coverage option notices to employees.
overtime tracking
Management of part-time employees’ hours with alerts for anyone who has exceeded their allowed hours of service for the week.
Benefit enrollment tracking
Benefit enrollment tracking to ensure applicable employees are covered.
Benefit enrollment tracking
Reporting to determine which employees are eligible for health coverage.
ACA alerts
Dashboard views to manage measurement periods and receive ACA alerts.
annual ACA reporting
Annual reporting with pre-populated 1094-C and 1095-C forms and e-filing on your company’s behalf.

How APS Can Help

APS offers an ACA compliance and reporting solution that takes the complexity out of the ACA. Our error-checking algorithm ensures codes are valid, and data is formatted correctly for reporting.

Accurately capture and report health plan coverage information to the IRS with pre-populated forms. ACA tracking has never been easier. We’ll even e-file for you.

State Unemployment wage bases

For more updates on state unemployment wage base changes, visit our SUTA Wage Bases page.

FUTA Credit Reductions

For more updates on state eligibility, visit our FUTA Credit Reductions page.

Payroll Tax Rates and Changes

Visit our Payroll Taxes: Rates and Changes page to make sure you stay compliant.



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