We’re now in the thick of the fourth reporting season for the Affordable Care Act (ACA) and for many HR professionals, it’s still a tricky requirement. There always seems to be an ACA provision that’s changing, being debated, or even disappearing.
Most recently, in late December 2018, right as ACA deadlines were approaching, a federal judge in Texas ruled the health law unconstitutional due to the individual mandate penalty being zeroed out, a change that went into effect January 1, 2019. That’s a big deal, right? It could be, but there’s been no impact yet, especially as it relates to employer ACA requirements.
The new ruling is likely to be reviewed by the 5th U.S. Circuit Court of Appeals, and possibly by the Supreme Court, but don’t expect a resolution until 2020. Until then, HR should stay informed on the latest lawsuit developments and continue to comply with the ACA.
That’s one thing that hasn’t changed: You still have employer reporting obligations to meet in the coming weeks. Here’s a quick reference guide on what you need to do and when plus the tricky parts of reporting that have tripped up companies in the past.
ACA Business as Usual
The ACA is alive and well, and that means HR must focus on delivering the required company and employee information to the IRS by the quickly approaching deadlines.
As has been required in previous years, employers must use the C-series forms to report on their full-time employees and the coverage offered to them. The good news for employers is that there are no substantive changes to the forms from prior reporting years. While the Feb. 28 deadline for paper filing 1094/1095 forms has passed, the upcoming filing deadlines are March 4 to furnish 1095-Cs to employees (extended from January 31) and April 1 for 1094/1095 e-filing.
Beyond meeting these deadlines, accurate and consistent data is essential to achieving compliance. Employee information often changes year to year, so ensuring it’s tracked and updated regularly is a critical step in reducing the risk of penalties. If you submit inaccurate data, like missing a digit in a zip code or accidentally filling in a double name, the IRS will reject your forms and require you resubmit them until they’re correct.
For the 1095-C Form, in particular, employers and their HR teams often struggle with lines 14 and 16 because there are many combinations of indicator codes that can be reported. The accuracy of these codes is critical to successful ACA compliance.
While it can be tedious, in the long term, it’s better to put time into regular data maintenance so you can get it right the first time around. If not, you run the risk of being penalized.
If the IRS believes a company failed to meet the ACA’s employer regulations to offer health care coverage to full-time employees, or if an employer fails to file the C-series forms, the IRS will send a penalty letter, called Letter 226-J. Penalty letters can come at any time during the year, for an infraction from a previous reporting year, so it’s important that HR professionals don’t let their guard down when it comes to ACA requirements.
Prepare for the Future
Legal challenges have been a part of the ACA ever since it became law. And yet, the health law continues to stand, despite some changes, most of which have only impacted the individual market. While the possibility exists that the law could be repealed or replaced, it’s looking less likely, especially with a Democrat-led House of Representatives.
Compliance with the law as written is still required and shows no immediate signs of being pulled back. So, for now, the ACA is the law and HR still needs to ensure employers remain compliant with current regulations. With filing deadlines fast approaching, the last thing you need is to be caught rushing to get your company’s information in order. Act now so you don’t have to pay later.
Arthur Tacchino, J.D., is an ACA expert and the Chief Innovation Officer at SyncStream Solutions, a company providing ACA reporting and compliance solutions.