The Affordable Care Act (ACA), also known as Obamacare, has been a landmark legislation impacting healthcare in the United States. Understanding and fulfilling reporting obligations under the ACA is crucial for employers to avoid penalties and ensure compliance.

Below are a few key things to know about ACA reporting:

• Beginning with the 2023 tax year (2024 filing year), employers who file 10 or more information returns in aggregate must file ACA forms electronically. This change encompasses nearly all information return types (including forms W-2 and 1099). This ends the option to file by paper for virtually all employers and therefore some smaller employers may need to engage with a third party that offers ACA reporting services.
• Form 1095 must be furnished to employees by March 1, 2024. Form 1094 and the 1095s must be filed electronically with the IRS by March 31, 2024 (extended to April 1, 2024 since March 31 is a Sunday).
• Employers (since 2021) are no longer able to rely on “good-faith relief” to potentially avoid IRS penalties for non-compliance. This relief was intended as a transitional grace period for employers that report incomplete or incorrect information on their ACA filings. Employers may be at risk of receiving significant penalties for failing to furnish accurate ACA filings.

What are your reporting obligations? Review the questions below to determine if you are in compliance.

• Am I considered an Applicable Large Employer (ALE)?

If you had 50 or more full-time or full-time equivalent employees during the previous calendar year you are an ALE. Click here for how to determine ALE status.  It is important to note that companies with a common owner or that are otherwise related under certain rules of section 414 of the Internal revenue code are generally combined and treated as a single employer for determining ALE status.

ALEs are covered under the ACA’s Employer Shared Responsibility Provisions (the employer mandate) and are required to offer minimum essential health care coverage that is affordable and provides minimum value to full-time employees and their dependents. Failure to do so may result in substantial financial penalties.

• What are my reporting requirements as an ALE?

An ALE must use forms 1094-C and 1095-C to report their compliance with ACA.  Form 1094-C is the authoritative transmittal form, while Form 1095-C provides detailed information about each employee's coverage. These forms must be filed with the IRS and distributed to employees. All ALEs (both fully-insured and self-insured) must complete the 1094-C and 1095-Cs.

The person responsible for handling ACA reporting should be well-versed in completing these forms accurately, including information on employee enrollment, cost, and affordability coverage. Consistent monitoring and documentation are essential to avoid errors and potential penalties.

• If I am NOT considered an Applicable Large Employer (ALE) do I still have reporting obligations?

Small employers (fewer than 50 or more full-time or full-time equivalent employees) who offer self-insured health coverage are responsible for providing form 1095-B to enrolled employees and must file these forms along with form 1094-B to the IRS. Form 1095-B shows health insurance coverage, the coverage provider, coverage dates, and individuals covered.

SEK is available to guide you through determining ALE status, preparing and filing 1094/1095s, and responding to penalty notices (Letter 226-J).

Please contact Laura Stover using the contact form below if you have questions or would like to review your ACA reporting obligations.