The latest attempt to repeal Obamacare, also known as the Affordable Care Act (ACA), has failed. On July 28, 2017, the “Skinny Repeal,” which promised to eliminate the individual and small business mandates of Obamacare, was unsuccessful.
However, the new administration has vowed to continue working on the issue of healthcare. Whether new legislation will be introduced before the end of 2017, or what the fate of any such legislation would be, is hard to judge.
One thing is clear — Obamacare is still legally the law of the land as of this writing. The law applies to employers with 50 or more full-time employees (as this is defined under the Affordable Care Act).
Unless and until the legislation is officially changed, employers are required to comply with the law, including employee tracking and reporting requirements, and it’s more likely than not those tracking and reporting requirements will continue for the foreseeable future. Therefore, it’s a good time for a refresher about the requirements for employers under the ACA law.
5 ACA Reporting Tips Every Small Business Needs to Know
Which Employers Are Subject to ACA Reporting?
Employers with 50 or more full-time equivalent employees must provide benefits under the ACA or face a fine.
To determine whether you have 50 full-time equivalent employees as required under the ACA law, you have to follow a formula. According to the IRS, “To determine its workforce size for a year, an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.”
See the formula on this page to calculate the number of full-time equivalent employees (FTEs) for a month.
What Type of Reporting Is Required?
The ACA requires employers subject to the law to complete forms 1095-C along with the 1094-C transmittal sheet. The forms are intended to confirm full-time and full-time equivalent employees are getting minimum essential care under the law.
There is a reporting requirement for sending 1095-C and 1094-C transmittals to the IRS. Under the law, employers are required to send 1095-C to all employees to provide information on their healthcare coverage. Form 1094-C is sent only to the IRS as a cover sheet for the 1095-C forms filed with the agency.
Specifically, Form 1095-C provides information about the type of healthcare provided to your employees, as well as information on whether employees might be eligible for a premium tax credit. The form also provides relevant information about periods employees may have gone without required health coverage.
Form 1094-C is a cover sheet providing additional information to the IRS, including the name of the employer, number of employees and the number of 1095-C forms sent to employees and the IRS.
If you file electronically, you get more time to file than you do if you file by paper.
What Are the Deadlines for Filing?
Deadlines for filing these forms in 2017 were actually moved up earlier than in 2016. The move caused considerable confusion in the small business community as many small businesses were unaware of the change.
For 2018, the deadlines are:
- January 31, 2018 — Send Form 1095 copies to recipients/employees
- February 28, 2018 — Paper filing of 1095s (and 1094 transmittals) to IRS
- March 31, 2018 — E-filing of 1095s (and 1094 transmittals) to IRS
What Are the Penalties for Missing Filing Deadlines?
Employers missing the filing deadlines with the IRS for forms 1094-C and 1095-C or who file forms containing inaccurate information could face penalties of up to $260 per filing. Employers could also face a fine of $260 per filing for failure to distribute forms to employees or file with the IRS.
Employers with more than 250 full-time or full-time equivalent employees are required to file electronically by the IRS, rather than by paper.
What is Employer Shared Responsibility?
Under the ACA, employers with 50 or more full-time employees (or full-time equivalents) are required to provide sufficient and affordable healthcare coverage to those employees. The Employer Shared Responsibility provision also requires employers to communicate key details of health insurance coverage to the IRS, including verification that the “minimum essential coverage” (MEC) is being met. Employers that fail to meet these requirements face a Shared Responsibility Payment ranging from $2,000-$3,000 for every full-time and full-time equivalent employee not covered.
This gives you a quick overview of some of the major requirements of the Affordable Care Act. There are many more nuances and details that employers need to comply with, as well.
Even a full repeal of the ACA may not eliminate the IRS reporting requirement. Though some lawmakers continue to press for full repeal and replacement, any new plan may still carry a tax-related component (e.g., tax subsidies or tax breaks) that could require some level of IRS reporting.
At this point, businesses cannot count on the requirement being eliminated entirely. In fact, any new legislation may add to the burden, if tracking and reporting requirements change significantly.