2020 ACA Reporting Reminder. The Affordable Care Act (ACA) is the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010. The ACA requires certain employers to report to the IRS annually regarding the health care coverage they offer to full-time employees.
Under Section 6056 of the Internal Revenue Code, an Applicable Large Employer (ALE) must report information on Form 1095-C that discloses if an employer is subject to an assessment of a Shared Responsibility Payment. The report also determines if full-time employees are eligible for a premium tax credit, which helps pay for health insurance if the employee purchases it on the Health Insurance Marketplace. Generally, an ALE is an employer with 50 or more full-time equivalent (FTE) employees. If you are unsure whether your organization is an ALE, contact us to discuss.
If Suttle & Stalnaker prepared your 2019 1095-C forms, we will be contacting you soon with an updated 2020 template and further instructions. If you have already started tracking 2020 using the 2019 template, we can assist in getting your information copied over to the new template.
If we did not prepare your 2019 forms, please contact Drema or Erica so we can discuss your filing requirements and get you started tracking 2020 information. If you have any questions, please let us know.
The deadlines are as follows:
- March 2, 2021 – Form 1095-C must be furnished by ALEs to all full-time employees
- February 28, 2021 – Filing of Form 1095-C due for 2020, if filed on paper
- March 31, 2021 – Filing of Form1095-C due for 2020, if filed electronically
Employer Shared Responsibility Payment for failure to offer health insurance that provides Minimum Essential Coverage:
- An ALE subject to this penalty will pay $2,570 for each full-time employee (regardless if they took a tax credit) after excluding the first 30 full-time employees from the calculation.
Employer Shared Responsibility Payment for failure to offer Affordable Minimum Essential Coverage that provides minimum value:
- An ALE subject to this penalty will pay $3,860 for each full-time employee (if they obtained a subsidy on an exchange) after excluding the first 30 full-time employees from the calculation.
- The Non-Filing Penalty:
An employer who chooses to not fulfill their year-end 1095-C and 1094-C ACA reporting responsibility will be charged up to $550 per eligible employee – this penalty is similar to the W-2 non-filing penalty.
FINAL EXTENSION OF GOOD-FAITH RELIEF FOR FILING AND FURNISHING
Notice 2020-76 issued October 2, 2020 clarifies that 2020 will be the final year employers can utilize “Good-Faith Relief.” IRS penalties for ACA reporting non-compliance are high and can have a significant impact on your organization’s bottom line. However, as IRS enforcement of the ACA has ramped up, employers have traditionally been able to apply for a form of relief, which allows them to potentially avoid IRS tax penalties for non-compliance. This relief, known as “Good-Faith Relief” provides that employers that report incomplete or incorrect information on their information returns (including missing and inaccurate taxpayer identification numbers or “TINs”) can show they made a good-faith effort to file and furnish the appropriate forms.
In determining whether Good-Faith Relief applies, the IRS will take into account whether an employer made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data or testing its ability to transmit information to the IRS. The 2020 reporting year will be the final year this type of relief is available. Notice 2020-76 conveys this plainly: “As this good-faith relief was intended to be transitional relief, this is the last year the Treasury Department and the IRS intend to provide this relief.”