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SEPTEMBER, 2018

COMPLIANCE
HR

ACA Reporting: Are you Prepared?

Fall is right around the corner, which means cooler temperatures, new episodes of your favorite shows, and of course…year-end processing. And with year-end processing comes ACA reporting. So how prepared is your company for upcoming ACA reporting? Let’s take a look at the requirements for ACA reporting so you can get your game plan in place.

IRS Filing Deadline for Tax Year 2018

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ACA reporting deadlines for 2019:

Due DateDeadline
January 31, 2019Supply Forms 1095-C to employees.
February 28, 2019File paper Forms 1095-C with transmittal Form 1094-C.
April 2, 2019e-File Forms 1095-C with transmittal Form 1094-C.
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Preparing Forms 1095-C

Form 1095-C is the employer-provided health insurance offer and coverage form. It consists of two parts:

  • Part I Employee and Applicable Large Employer Member (Employer): Provide general employee and employer information such as names and addresses.
  • Part II Employee Offer of Coverage: Indicate the type of coverage offered if any using the provided IRS codes, the lowest cost monthly premium for the employee, and the applicable safe harbor codes.

Tip: Employers are required to furnish Form 1095-C only to the employee. Employees should provide a copy of this form to any family members covered under self-insured employer-sponsored plan listed in Part lll.

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Preparing Forms 1094-C

Form 1094-C is the transmittal of employer-provided health insurance offer and coverage information returns. It consists of four parts:

  • Part I Applicable Large Employer Member (ALE Member): Provide general employer data such as name, address, the total number of Forms 1095-C submitted, and if it is an authoritative transmittal.
  • Part II ALE Member Information: Enter the total number of forms filed on behalf of the ALE Member, if the ALE Member is a member of an Aggregated ALE Group and any certifications of eligibility that apply (i.e. Qualifying Offer Method).
  • Part III ALE Member Information – Monthly: Indicate if minimum essential coverage was offered, the full-time employee count for the ALE Member, the total employee count, the months the ALE was a member of an aggregated ALE group, and the code indicator for Section 4980H Transition Relief (if applicable).
  • Part IV Other ALE Members of Aggregated ALE Group: Enter the names and EINs of other ALE Members of the Aggregated ALE Group (if applicable).

Tips for ACA Reporting

Perform an ACA Audit

To be prepared for the overwhelming season that is year-end reporting, run an audit on your past 1094-C and 1095-C filings during the summer. Performing an audit could catch any errors on past filings and ensures that your organization won’t be duplicating last year’s mistakes before ACA reporting officially begins. Not only can auditing save your organization time and stress this fall, but you’ll be able to fix any mistakes on your previous years’ filings before any penalties are assessed.

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Proactively Check for Errors

The IRS requires that employee Forms W-2 and Form 1095-C must match what is printed on their social security cards. For example, if an employee has a hyphenated last name on their social security card but it is not hyphenated on their Form W-2 or Form 1095-C, this will be viewed as an error.

Make the effort now to solicit Taxpayer Identification Numbers (TIN) and correct any other information by checking your employee records or use a provider that offers an error-checking algorithm to automate the process.

Watch for IRS Penalties

The penalties for failure to file complete and accurate Forms 1095-C and related forms by the April 2, 2019 deadline are up to $260 per return, with a maximum penalty of $3,218,500 per organization. If the IRS determines that failure was intentional, the penalty is $530 per return without limitations to the total penalty amount per organization.

Be Aware of ACA Reporting Extensions

If you plan to file for an extension for ACA reporting forms, make sure you set a deadline that gives you ample time to apply. Form 8809 must be filed on or before the due date of the return for an extension.

Let’s Get Ready for ACA Reporting

Now is the time to review your current ACA strategy and determine what method of reporting you plan to use if you’re subject to the Employer Mandate. It’s important to approach ACA reporting with a team effort, aligning HR, the CFO or Controller, and your company’s accountant or tax advisor.

It is crucial to use a system that accurately tracks and records coverage provided for each full-time employee on a monthly basis so you are better prepared at the end of the year.

When reviewing your current ACA strategy, consider the following:

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Does your organization qualify as an ALE according to the guidelines of the Employer Mandate?

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Do you have the right systems in place to properly track and manage ACA compliance, including employee statuses, benefits administration, and variable hour employee tracking?

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What reporting method works best for your organization?

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Have you recently reviewed the IRS page on ACA reporting to ensure you’re up to date on reporting guidelines?

Prepare with a Partner

If your company is looking to partner with a trustworthy provider who offers ACA compliance and reporting solutions, or if you’re looking to find a better fit for your needs, it’s important to look at what services are offered. When vetting providers, take a look at the features and benefits their solutions offer and how they will work with your compliance strategy. Find out if the vendor provides the following:

Automatic reporting of employer-sponsored coverage amounts on form W-2s.

A full-time equivalent calculation to determine if your organization is an applicable large employer.

Management of marketplace notices to employees.

Management of part-time employees’ hours with alerts for anyone who has exceeded their allowed hours of service for the week.

Benefit enrollment tracking to ensure applicable employees are covered.

Reporting to determine which employees are eligible for health coverage.

Dashboard views to manage measurement periods and receive ACA alerts.

Annual reporting with pre-populated 1094-C and 1095-C forms and e-filing on your company’s behalf.

How APS Can Help

APS offers an ACA compliance and reporting solution that takes the complexity out of the ACA. Our error-checking algorithm ensures codes are valid and data is formatted correctly for reporting. Accurately capture and report health plan coverage information to the IRS with pre-populated forms. ACA tracking has never been easier. We’ll even e-file for you.

To learn more, please visit our website at www.apspayroll.com or call 855-945-7921.

Sources:

Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056)

IRS: Draft 2018 Form 1094-C

IRS: Draft 2018 Form 1095-C

IRS: Form 8809 Application for Extension of Time to File Information Returns

Increase in Information Return Penalties

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