The Affordable Care Act (ACA) is a complex law that crosses several lines of business including finance, tax, legal, IT, benefits and HR. Since no one person is an expert in all six areas, it’s natural that questions will arise when it’s time to do your government mandated reporting.
To help ease that process, here are the answers to some of the most frequently asked ACA questions:
- Who is Required to Report?
You are required to report if you are an applicable large employer (ALE). An ALE is a company with 50 or more full-time or full-time equivalent employees (FTEs), or a small employer that offers self-insured plans. Both groups are required to report IRS-required data annually beginning in 2016.
Your ALE status for the upcoming year is determined by current-year employee information. Full-time and full-time equivalent employees must be included in the calculation.
- Is My Participation Mandatory?
If you have 50 or more employees, you must complete Forms 1095-C and 1094-C.
If you have fewer than 50 employees, there are a few scenarios to consider, depending on your insurance status:
- Self-insured: You must complete Forms 1095-B and 1094-B
- Fully-insured: Your insurance carrier is responsible for filing on your behalf
- No insurance: No reporting is required
No matter what, don’t forget to file Form 1095-C. It provides the IRS with information about employer-offered health plans. The 1095-C sends the IRS the information it needs to ensure that employers offering coverage are providing the minimum essential coverage that is affordable as required under the ACA.
- Will I Be Graded on a Curve?
There are no grades. You either pass or fail – and failure comes at a high cost. Penalties range from $250 to $3 million for each file return that’s missing, incorrect or incomplete. That includes employee copies.
You can be penalized for the following:
- Failure to file returns
- Failure to provide a copy to employees
- Failure to include required information
- Including incorrect information