As employers begin the final countdown to the 2015 Affordable Care Act (ACA) reporting deadlines, an important consideration to keep in mind is the IRS’s assurance that employers who make a good faith effort to comply with the requirements will not be met with filing penalties this first year. This penalty relief should provide some comfort, but employers may be left wondering exactly what a “good faith effort” entails. Generally, a good faith effort is one made with honest, sincere intention. In the context of ACA reporting, how will an employer be able to demonstrate an honest, sincere intention to comply?
Know your Status: First and foremost, an employer must know with certainty whether it is subject to the ACA reporting requirements. Applicable large employers – or ALEs – are those employers that employed an average of 50 or more full-time and full-time equivalent employees during the previous year. All ALEs are subject to the ACA reporting requirements under Section 6056. This includes mid-size employers with 50-99 full-time and full-time equivalent employees in the prior year, and applies regardless of whether the ALE sponsors a fully-insured or self-funded medical plan.
The other category of employers subject to the reporting requirements under Section 6055 are small employers that sponsor a self-funded medical plan. Small employers are those that employed fewer than 50 full-time and full-time equivalent employees in the prior year. These small employers also sponsor a self-funded medical plan. Small employers that sponsor fully-insured medical plans are not subject to the IRS reporting requirements under ACA.
Provide Accurate Data: Employers subject to ACA reporting under either Section 6055 or Section 6056 must take care to provide accurate data. ALEs will use Forms 1094- and 1095-C, and must report on all full-time employeesemployed during the 2015 year. ALEs will be responsible for reporting offers of medical coverage made or not made to each full-time employee, and must also supply information on enrolled dependents and spouses if the ALE sponsors a self-funded medical plan. Small employers that sponsor a self-funded medical plan will use Forms 1094- and 1095-B, and must report on all individuals covered under their medical plans during the 2015 year.
Meet the Deadlines: Finally, to be considered a good faith effort, employers must comply with the relevant reporting deadlines. Employers must provide employees with an employee statement (a copy of either Form 1095-B or C) no later than January 31. For 2015 reporting, the deadline falls on February 1, 2016. Employers must also submit all forms with the IRS no later than February 28, or by March 31 if the forms are filed electronically. The IRS provides employers with the opportunity to request an automatic 30-day extension for filing, as well as an extension for providing employee statements, but requests must be submitted no later than the due date for form submission.
Employers that provide accurate information in time to meet the reporting deadlines will have a strong case for a good faith effort – despite any potential errors. On the other hand, employers that shirk their reporting responsibilities altogether or that fail to timely report will not receive the benefit of the penalty exemption and may face fines of up to $250 per form.