This holiday season, give the gift of filings. With the end of the year just around the corner, businesses will need to start thinking about getting all their ducks in a row so that they can have a smooth tax filing process coming into the new year. Of course, this is all easier said than done. I mean, it’s already confusing enough having to file taxes just for yourself, let alone a whole business with multiple employees, health insurance, write-offs, deductions, and all sorts of other things.
It can be hard to keep up with everything you need to know about filing your taxes. We here at Payday HCM have helped our clients work through numerous end-of-year humps. We know how simultaneously confusing and important this time of year can be. And one of the more important and sometimes consuming aspects of all this is the Affordable Care Act.
In this article, we’ll go over everything you need to know about filing and maintaining compliance with the Affordable Care Act. We’ll go over each step of the process, looking at which businesses qualify for what components, what the filing process actually involves, and the deadlines for filing as well as possible penalties. By the end of this article, you’ll be much better equipped to take on this year’s filings.
In this article, you will learn:
- How Do You Remain Compliant With The ACA?
- What Do You Need To Report And File For The ACA?
- ACA Deadlines And Penalties
How Do You Remain Compliant With The ACA?
The first step in the ACA filing process is to go over the compliance requirements. Given how the ACA is structured, what you’ll actually need to do to be compliant will depend on a couple of factors.
Large Employer Requirements
The biggest factor that affects what you’ll need to be reporting or filing at the end of the year is the size of your organization. The ACA splits businesses into two parts: small and large employers. Determining which category you fall into will determine what requirements apply to your business and whether you’re eligible for certain tax credits.
If you are a large employer (your business has 50 full-time employees or averaged 50 full-time employees during a calendar year), you must comply with the ACA’s employer shared responsibility provisions. These provisions dictate that an applicable large employer must either offer minimal essential insurance coverage that is both affordable and provides minimum value or make an employer shared responsibility provision payment to the IRS.
Minimum value is achieved when an employer-sponsored health plan covers at least 60 percent of expected incurred costs. Affordability is somewhat harder to determine, but the IRS states that employers can use either an employee's W-2 or the federal poverty line in tandem with their annual salary in making affordability determinations.
Small Employer Requirements
For businesses that don’t have or average 50 full-time employees in a calendar year, the provisions do not apply. However, if you do cover at least 50 percent of your employees’ premium costs and have less than 25 full-time employees, you may qualify for the Small Business Health Care Tax Credit.
Small employers can also use the Small Business Health Options Program (SHOP) tool to find insurance coverage. Small or large employers that choose to self-insure may have to make a payment toward the Patient-Centered Outcomes Research Trust Fund.
What Do You Need To Report And File For The ACA?
Now, with all of this said, how does the IRS actually go about checking that large and small employers are compliant? Businesses must comply with a few different forms and reporting requirements to ensure they are following the ACA’s guidelines.
Large Employer Filing And Reporting Requirements
Large employers that offer their employees a group-sponsored health insurance plan must file a 1095-C form with the IRS. This form contains the information the IRS needs to determine whether minimal essential health coverage was offered, whether it provided minimum value, and whether it was affordable.
Large employers must also furnish employees with a copy of the 1095-C form containing the same information. This filing also helps to determine whether full-time employees are eligible for the Premium Tax Credit, which allows individuals who are not offered health insurance to purchase a plan through the Health Insurance Marketplace.
Small Employer Filing And Reporting Requirements
Small employers generally don’t have much in the way of reporting and filing with the ACA, depending on whether they decide to offer health insurance. One requirement that applies to all small employers, regardless of whether they offer health insurance coverage, is that they are required to withhold an additional 0.9 percent of wages for the Additional Medicare Tax.
Some small employers will be required to report the value of employees’ health insurance coverage on their W-2s if coverage is offered—the IRS outlines what requirements would determine if a small employer must report this information. Small employers that self-insure will need to report this information with form 1095-B.
ACA Deadlines And Penalties
With reporting and filing come deadlines, and with deadlines come penalties. We’ll go over them here to ensure you don’t miss one.
ACA Reporting Deadlines
There are a few key important deadlines when it comes to filing and reporting. These deadlines are:
- January 31: Deadline for providing 1095-B or 1095-C forms to individuals
- February 28: Deadline for paper filing of 1095-C forms
- March 31: Deadline for electronic filing of 1095-C forms
In addition to this, applicable large employers must provide employees with the same information that will be provided by the IRS in a statement by January 31. Self-insured employers (filing 1095-B forms) are subject to the same deadlines.
ACA Reporting Penalties
There are penalties that can occur for employers who either fail to mee these deadlines or fail to properly report their information to the IRS. For employers who fail to file the proper forms, the penalty is $270 for each return where the information was failed to be filed. This penalty caps out at $3.275 million.
The same penalty amount—$270 for each return where the failure occurs, maxing out at $3.275 million—applies for employers who must issue corrections to any filings. The IRS can also issue out differing individual penalties to employers who intentionally disregard filing any information.
Make ACA Reporting And Filing Stress-Free
The end of the year is a time for stress from all fronts. Not only do most people feel the pressures mounting from end-of-the-year sales pushes or human resources begging everyone to use the rest of their PTO, but you also have the holiday season and your personal life to worry about. For business owners, this can be an especially stressful season when thinking about your tax filings for the end of the year. It can be hard to know what information you need to provide. With the information in this article, though, getting through the end of the year doesn’t have to be a stressful experience.
Of course, this is still a lot of information, and it can get confusing once you really get into the weeds. Let Payday guide you through your ACA filing journey by exploring our comprehensive services.
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