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Common Misperceptions and Realities Around ACA Reporting

The 2016 tax season may seem far away, but with numerous changes in the works for organizations that offer group health coverage, its actually the ideal time to start planning for ACA reporting.  Previous blog posts have shared information around reporting requirements and the release of draft forms and penalty fees from the IRS.

Most organizations have likely started the process of gathering employee health coverage information and data necessary for 2015 tax returns. But even if you think you are on top of all the mandates around reporting, there are still some common misperceptions lingering:

  • If your organization has less than 50 employees but you self-insure (providing minimum essential health coverage), you are required to report this coverage to the IRS.
  • If your organization has 50+ employees and qualifies for transition relief based on size or non-calendar year plans, you are still required to report on full time employees for 2015; eligibility for relief should be reported on Form 1094-C.
  • If your organization has 50+ employees but doesn’t offer coverage (or doesn’t have any employees enrolled), you are still required to report information to the IRS; compliance and penalty fees play into reporting requirements.
  • Penalty relief for errors made on 2015 returns is only available if it can be proven that efforts to comply were made in good faith; failure to file on time will not be considered for penalty relief unless reasonable cause can be shown.
  • Organizations with 250+ employees must file electronically; those with fewer than 250 employees can choose to file via paper or online.
  • That said, all employers (with 50+ employees) must provide copies of Forms 1095-B and 1095-C to covered employees by paper unless consent is given for the forms to be delivered electronically.
  • Part-time employment is more than a designation; it is only applicable with regard to the ACA if an employee works less than an average of 30 hours per week.

In addition, it is worth clarifying when each form needs to be used, depending on your organization’s size and method of coverage.  If your organization has 50+ employees and self-insures, you will use Forms 1094-C and 1095-C.  If your organization has 50+ employees but has fully-insured coverage, you will use the same forms but only fill out the applicable section of 1095-C.  And if your organization is self-insured but not subject to “pay or play” guidelines, you will use Forms 1094-B and 1095-B.

For questions around ACA reporting requirements, please contact us.

The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purp