Time to Prepare for ACA Reporting in 2019

The IRS is enforcing the ACA’s employer coverage and reporting mandates

Stephen Miller, CEBS By Stephen Miller, CEBS November 21, 2018
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updated on November 30, 2018

IRS Extends Form 1095 Distribution Deadline to March 4

On Nov. 29, the IRS extended the deadline for employers to distribute 2018 Forms 1095-C to employees by 30 days—until March 4, 2019, instead of Jan. 31. The delay also applies to self-insured small employers, insurers and others issuing Form 1095-B to covered individuals. See the SHRM Online article IRS Extends Form 1095 Distribution Deadline to March 4.


The IRS has published final forms and instructions to help employers prepare for next year's reporting on the health coverage they offered employees in 2018.

Employers subject to the Affordable Care Act (ACA) must distribute reporting forms to employees and file with the IRS early in 2019.

"The release of these documents is another clear message from the IRS that it's continuing to enforce the reporting requirements," said benefits attorney Arthur Tacchino, a principal with compliance firm SyncStream Solutions.

Below are links to the final forms and instructions on the IRS website:

"The good news for employers is that there are no substantive changes to the forms from the prior year," Tacchino said. But given the complexity of Form 1095-C reporting, "employers should be ensuring they are on top of their data as the 2018 calendar year comes to a close."

"The focus for most employers should continue to be on accurate, timely gathering of the required data for reporting," said Kim Buckey, vice president of client services at DirectPath, a benefits education, enrollment and health care transparency firm.

[SHRM members-only toolkit: Complying with and Leveraging the Affordable Care Act]

Filing Deadlines

The critical 2019 filing deadlines regarding 2018 coverage are as follows:

ACA Requirement Deadline
1095 forms delivered to employeesMarch 4 (extended from Jan 31)
Paper filing with IRSFeb. 28
Electronic filing with IRSApril 1

Source: IRS.
Employers that file 250 or more information returns with the IRS must file the returns electronically.

"Employers can save themselves time, money and effort by carefully reviewing the data before year-end to ensure that full-time employees are correctly identified, and that the company is designing its programs to offer affordable coverage to all full-time employees," Buckey said.

Such preparation will reduce the risk of receiving penalty letters and paying assessments.

[SHRM members-only guide: How to Use the Look-Back Measurement Method to Determine Full-Time Status Under the Affordable Care Act]

Not Just ALEs

With Form 1095-C, applicable large employers (ALEs)—those with, on average, 50 or more full-time employees or part-time equivalents during the preceding calendar year—show proof of compliance with the ACA's employer shared-responsibility mandate. ALEs use Form 1095-C to report whether they offered eligible employees affordable health coverage that provides minimum essential coverage and meets the minimum value threshold.

"Come tax day 2019, employees must show whether they or their family members had minimum essential coverage on Line 61 of their individual tax returns," said John Duval, president and CEO of Fuse Workforce Management, a compliance software firm. "Form 1095-C helps employees complete their individual tax returns by providing important information regarding their health coverage for the previous calendar year."

"While some employees may be ready to file their federal income tax returns before they receive their Form 1095-C or 1095-B, the IRS indicated that they may file their income tax returns without the forms reporting on health coverage during 2018," noted Greta Cowart, an attorney at law firm Winstead in Dallas.

Small employers with fewer than 50 full-time employees are exempt from most ACA reporting requirements but not all, the IRS points out. For example, self-insured small employers must complete and file Forms 1095-B and 1094-B (the transmittal form) with the IRS, as well as provide full-time employees with a copy of Form 1095-B.

Small employers also are required to file Forms 1095-C and 1094-C if they are members of a controlled or affiliated service group that collectively has at least 50 full-time employees.

Employer Shared Responsibility

ALEs not in compliance with the coverage provisions are subject to the ACA's employer penalty provisions.

To prepare for ACA reporting, the IRS advises ALEs to:

  • Identify full-time employees based on the ACA definition of full time (those who average 30 hours of work per week in one month), considering special classifications such as staffing employees, independent contractors, temporary or short-term employees, and even interns.
  • Assess whether the monthly measurement method or look-back measurement method to determine full-time status is best, based on the nature of the company's workforce.
  • Update plan documents and summary plan descriptions if necessary for the measurement method selected.

An IRS Q&A provides more information on 1095 filing requirements.

 

Checklist for 2018 ACA Reporting

• Determine ALE status for 2018 based on 2017 data.

• Check reporting obligations for ALEs the self-insure group health plans, ALEs that offer fully insured group health plans and non-ALEs that self-insure group health plans.

• Determine electronic filing status.

• Evaluate whether proper data collection is in place to meet reporting requirements.

• Review the instructions for the forms that must be completed for changes from prior years.

• Make sure Social Security number request obligations are being fulfilled.

• Have a plan for timely form completion for employee statements.

• Issue employee statements to employees on or before Jan. 31, 2019 [now extended to March 4].

• Submit required paper forms to IRS on or before Feb. 28, 2019.

• Submit required electronic forms to IRS on or before April 1, 2019.

Source: Wagner Law Group via The Practical Lawyer, An Employer's Guide to Navigating the ACA Reporting Requirements.

Penalty Letters Arrive

Earlier this year, the IRS sent out penalty assessment letters, called Letters 226J, for alleged violations of the ACA's employer mandate in 2015. A new round of letters is expected to be sent out later this year and through 2019.

Small Business Health Care Tax Credit Form Updated

In November, the IRS also issued Form 8941, Credit for Small Employer Health Insurance Premiums, for tax year 2018, and draft filing instructions.

The small business health care tax credit is limited to employers with fewer than 25 full-time equivalent employees that pay an average wage of about $50,000 a year or less, and that pay at least half of their full-time employees' health insurance premiums for Small Business Health Options Program (SHOP) coverage.

The maximum credit is 50 percent of premiums paid by small businesses or, at small nonprofit organizations, 35 percent of premiums paid. The credit is available to eligible employers for two consecutive taxable years.

In April, the IRS released guidance on qualifying for the credit if small employers are in areas with no available SHOP plans.



Related SHRM Articles:

A Split Congress May Pursue Health Care Fixes, SHRM Online, November 2018

Due in 2019, Employers' Final PCORI Payment Is Rising, SHRM Online, November 2018

ACA's Affordability Threshold Rises in 2019, SHRM Online, May 2018

Visit SHRM's resource page on health care reform.


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