Are You Prepared to Comply with IRS Form 1095-C Reporting Requirements Under the ACA?

The following blog post from the SC&H Group Employee Benefit Audit practice explores the impact of new reporting requirements under the Affordable Care Act. If you are an employer and don’t “act on the Act” now, you could face costly consequences associated with non-compliance.

Earlier this year, the IRS issued final regulations to Applicable Large Employers and health insurance reporting requirements.

An applicable large employer (ALE) is defined by the IRS as an organization that employed an average of at least 50 full-time employees on business days during the preceding calendar year. A full-time employee generally includes any employee who was employed, on average, at least 30 hours per week. Employers must also factor in part-time or seasonal employees when determining the 50 full-time worker thresholds. These employees should be accumulated as FTE equivalents in the calculation. Employers should also be cognizant of controlled group issues when determining employee count for reporting purposes.

ALEs will be required to file IRS Form 1095-C beginning in January 2016 for the preceding calendar year. This form will be required along with W-2 reporting – and should be considered just as important to employers. The information to be reported on the Form 1095-C must be accumulated from multiple sources – the plan sponsor’s HRIS, payroll provider, and health insurance provider.

The bottom line – this will impact both organizational and employee information, and comes with a steep penalty for non-compliance. The fines for non-compliance could result in $100 per day per employee. ALEs should begin preparing now to avoid paying penalties later.  Processes should be designed to ensure they are able to gather and merge data from all of the above mentioned databases/vendors.

“The convergence of finance, human resources, and technology data that is necessary to fulfill this new reporting requirement can take time to fully and properly implement” states Jennifer Amato, a Director in SC&H Group’s Employee Benefit Plan Audit practice. “Your company should be taking the necessary steps as soon as possible to plan and remain compliant. The clock is ticking, and January 2016 will be here before you know it.”

Companies are required to distribute this form to employees by January 31, 2016 and report to the government no later than February 28, 2016 or March 31, 2016 (if filed electronically).

Are you prepared for the impact of this new reporting? If you are an Applicable Large Employer and have questions on how to fully comply with the new requirements set forth by the ACA, please contact Jen Amato here.