2023 Affordable Care Act (ACA) Reporting Deadlines and Potential Penalties

By: Drema Foster, PAFM

As we’re closing in on 2024, employers must be aware of the most recent changes to Affordable Care Act (ACA) reporting. Since 2015, employers have been able to file their Forms 1094-C and 1095-C by paper rather than electronically if they were filing less than 250 returns. However, beginning in 2024, employers that file ten or more returns will now be required to file electronically. This change will apply to the 2023 reporting year.

In addition to reducing the 250-return threshold to 10 or more, the final regulations specify that filers will be required to aggregate the various types of information returns covered by the regulations, which includes Forms W-2, 1099, along with certain tax returns, in addition to Forms 1094-C and 1095-C. Previous regulations allowed filers to consider each type of information return separately rather than as an aggregate, eliminating the need for many entities to file electronically. That is no longer the case. Once aggregated, a determination regarding the necessity to e-file will be made if an employer has at least ten returns.

Who is Required to File
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. Generally, an ALE is an employer with fifty (50) or more full-time equivalent (FTE) employees during the previous calendar year. This may include employers that are part of an aggregated ALE group due to significant common ownership or control stemming from related employer entities. If you are unsure whether your organization is an ALE, contact us to discuss.

  •  The ACA requires Applicable Large Employers (ALEs) to report whether they offered minimum essential coverage (MEC) that was affordable and provided minimum value to full-time employees.
  •  Employers of any size with self-insured plans (including level-funded) also report months of coverage for all individuals. Regardless of funding arrangement, ACA reporting for ALEs is handled via IRS Forms 1094-C and 1095-C.

Reporting Deadlines
The IRS reporting deadlines are as follows:

March 1, 2024 – Form 1095-C must be furnished by ALEs to all full-time employees.
February 28, 2024 – Filing of Form 1095-C due for 2023, if filed on paper
March 31, 2024 – Filing of Form 1095-C due for 2023, if filed electronically. Required for all companies filing ten or more returns to file electronically.

Potential Penalties
Every year, the IRS updates the inflation-adjusted amounts that will be imposed against any Applicable Large Employer (ALE) member who falls into one of the following categories:

  • Under Section 4980H (a), a penalty will be levied on an employer who fails to provide group health coverage to a minimum of 95 percent of its full-time employees.
  • Under Section 4980H (b), when an employer offers coverage to their employees that is either unaffordable or does not meet the minimum value standards set by the Affordable Care Act.

For the 2023 tax year, the IRS has declared that the penalty under Section 4980H(a) is $2,880 ($240/month) and the penalty under Section 4980H(b) is $4,320 ($360/month). With the increasing costs associated with non-compliance, employers need to assess their group plan offerings carefully. It is also essential to ensure that these plans provide comprehensive coverage to full-time employees, including at least one affordable self-only option that meets minimum value benefit requirements.

TIN Mismatch [Social Security Number (SSN)] Errors
By far, the most common error message received from the IRS on a given employee’s 1095-C form are TIN mismatch errors. This means the social security number (SSN) specified on the 1095-C does not match what the IRS database has on file for the name provided. This could be for either the employee themselves and/or an employee’s dependent (if part III of the 1095-C was populated). The employer will need to check both the spelling of the person’s and/or dependent’s name AND the social security numbers.

Common reasons for mismatches are:

  • Use of maiden name or married name in the system when IRS has something else on file.
  • Mistyped information or bad data entry
  • Employees using fraudulent SSN numbers.

Employers are expected to make a reasonable measure of effort to secure the correct combination of SSN and name for the forms or be subject to penalties from the IRS. Employers must demonstrate they made at least three reasonable attempts to obtain the correct information.

Good-Faith Relief Eliminated
The “Good-Faith Relief” provided by the IRS during previous reporting years for filing and furnishing, even if there were non-willful errors or omissions, is no longer applicable. IRS penalties for ACA reporting non-compliance are high and can have a significant impact on your organization’s bottom line. Please include accurate, complete employee information (including full legal employee names, and Social Security numbers, or date of birth) to avoid penalties from the IRS.

If Suttle & Stalnaker prepared your 2022 1095-C forms, we have already sent you the 2023 data template. Our HR Consulting team at Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on navigating the Affordable Care Act reporting complexities or you have not received the information, contact Drema Foster, PAFM at dfoster@suttlecpas.com or 304.343.4126.