One mistake more and more employers are making is failing to file the required Affordable Care Act tax-related forms with the IRS.
If you are what’s considered an “applicable large employer” (ALE) under the ACA, you are required to file with the IRS forms 1094 and 1095, often separately and before your annual tax returns are due.
Under the ACA, employers with 50 or more full-time and “full-time equivalent” workers are considered an ALE and are required to provide affordable health insurance to their staff that also covers 10 essential benefits as prescribed by the law. This is what’s known as “the employer mandate.”
Filing these documents is not the responsibility of your health insurer as it’s you that’s arranging the employer-sponsored health insurance for your staff. Be aware that you can face penalties if you:
- Don’t file the forms in a timely manner,
- Make mistakes when filing the forms, or
- Fail to file the forms altogether.
The IRS requires these forms to ensure that ALEs are providing health coverage to their employees and that the employer is complying with the employer mandate portion of the ACA.
The forms
- Form 1095-C — This is basically the W-2 reporting form for health insurance. The form tells the IRS which employers are providing coverage and which employees are getting coverage through their employers.
- Form 1094-C — This form provides information about health insurance coverage that the employer provides.
Here are the deadlines you need to be aware of:
- Jan. 31, 2022 — Individual statements (Form 1094 C) for 2021 must be furnished to employees by this date.
- Feb. 28, 2022 — If filing paper returns, Forms 1094 C and 1095 C must be filed by this date.
- March 31, 2022 — If filing electronically, Forms 1094 C and 1095 C must be filed by this date.
Penalties
The general potential late/incorrect ACA reporting penalties are $280 for the late/incorrect Forms 1095-C furnished to employees, and $280 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS.
That comes to a total potential general ACA reporting penalty of $560 per employee when factoring in both the late/incorrect Form 1095-C furnished to the employee and the late/incorrect copy of that Form 1095-C filed with the IRS.
The maximum penalty for a calendar year will not exceed $3,392,000 for late/incorrect furnishing or filing.