The Affordable Care Act (ACA) significantly changed the U.S. healthcare system, especially for employers and individuals. One of the key aspects of the ACA is the reporting requirements that employers and health insurers must follow. These requirements help ensure adherence to the ACA’s mandates and provide the IRS with essential information for enforcement. In this blog post, we’ll overview ACA reporting requirements, delve into the various reporting forms, and explore state-specific mandates that employers must be aware of in 2024.
Overview of ACA reporting requirements
The ACA introduced a range of reporting obligations for employers, insurers, and individuals. These obligations ensure compliance with the ACA’s mandates and help the IRS enforce penalties on those who fail to comply. The reporting requirements are complex and vary depending on the size of the employer, the type of health coverage offered, and the state in which the employer operates.
History of ACA reporting
Congress signed the ACA into law in 2010, but reporting requirements took effect in 2015. Since then, employers with 50 or more full-time employees (or equivalents) must report information about the health coverage they offer. The IRS uses these reports to verify compliance with the employer mandate and determine whether individuals qualify for premium tax credits under the individual mandate.
The employer mandate
The employer mandate, also known as the Employer Shared Responsibility Provision, requires employers with 50 or more full-time employees to offer affordable health insurance that provides minimum essential coverage. Employers who fail to meet this requirement may face penalties.
The individual mandate
The individual mandate required most Americans to have health insurance or face a penalty, but the federal penalty dropped to $0 starting in 2019. However, some states have implemented their own individual mandates, which still require residents to have health coverage or pay a penalty.
ACA reporting forms
Form 1095-A
The Health Insurance Marketplace issues Form 1095-A to individuals who purchased health insurance through the exchange. This form provides the information needed to claim the premium tax credit.
Form 1095-B
Insurance providers, including self-insured employers with fewer than 50 full-time employees, issue Form 1095-B to report the type of coverage they provide to individuals and their dependents.
Form 1095-C
Applicable Large Employers (ALEs) use Form 1095-C to report information about the health coverage they offer to their employees. The form details whether the employer offered coverage, the cost of the coverage, and the months the employee was eligible for it.
Form 1094-B
Employers submit Form 1094-B to the IRS along with Form 1095-B; consequently, both forms are necessary for complete reporting. Form 1094-B provides summary information about the forms being filed.
Form 1094-C
Employers submit Form 1094-C to the IRS alongside Form 1095-C. This form provides summary information about the forms being filed and reports whether the employer offered coverage to at least 95% of its full-time employees.
Eligibility for ACA reporting
Employers with 50 or more full-time employees, including full-time equivalents, must file ACA forms with the IRS. These employers are known as Applicable Large Employers (ALEs). Employers with fewer than 50 full-time employees may still have reporting obligations if they offer self-insured health coverage; thus, they must be aware of these requirements.
State-specific ACA reporting requirements
In addition to federal ACA reporting requirements, several states have implemented their own individual mandates and reporting obligations. Employers in these states must comply with both federal and state requirements.
State individual mandates: impact on employers
Several states have implemented their own individual mandates, which require residents to maintain health insurance coverage. These mandates often come with additional reporting requirements for employers, making it crucial for businesses to understand the specific obligations in each state. These states include California, Massachusetts, New Jersey, and Rhode Island (as well as the District of Columbia).
Managing ACA reporting requirements
Getting ready for ACA reporting dates
To ensure compliance, employers should start preparing for ACA reporting well in advance of the deadlines. This preparation includes gathering necessary employee information, verifying coverage details, and ensuring that reporting systems are up-to-date.
Simplifying state and federal ACA filing
Given the complexity of both federal and state ACA reporting requirements, many employers find it beneficial to use advanced software solutions. These platforms can streamline the reporting process by automating form preparation, filing, and tracking compliance.
Conclusion
By understanding and effectively managing ACA reporting requirements, employers can avoid penalties while ensuring compliance with both federal and state regulations. As 2024 approaches, it’s crucial to stay informed about changes in ACA rules and state-specific mandates to maintain compliance and protect your business.
