Mastering ACA Reporting: Compliance and Timely Filing Tips

The Affordable Care Act (ACA) reporting is a critical responsibility for businesses to comply with healthcare coverage requirements. This process involves understanding reporting obligations and adhering to deadlines to avoid penalties.

Given the complexity and potential financial consequences, employers must grasp ACA reporting requirements. By understanding compliance obligations and implementing efficient filing strategies, organizations can meet their responsibilities effectively.

Key ACA Reporting Requirements

Navigating ACA reporting requires familiarity with the specific forms and data employers must submit. Applicable Large Employers (ALEs) with 50 or more full-time employees, including equivalents, must file Forms 1094-C and 1095-C. These forms ensure compliance with the ACA’s employer mandate by reporting details about the health coverage offered to employees.

Form 1095-C is provided to each full-time employee, outlining the coverage offered, its availability by month, and the employee’s share of the lowest-cost monthly premium for self-only coverage. This form helps employees determine eligibility for the premium tax credit. Form 1094-C serves as a transmittal form, summarizing the information in the 1095-C forms and providing the IRS with an overview of the employer’s compliance.

Employers should adhere to specific deadlines: Form 1095-C must be furnished to employees by January 31, while both Forms 1094-C and 1095-C must be filed with the IRS by February 28 if filing on paper or March 31 for electronic submissions. Missing these deadlines can result in penalties.

Penalties for Missing Deadlines

Failure to meet ACA reporting deadlines may result in penalties under Internal Revenue Code (IRC) Sections 6721 and 6722. These penalties apply to employers who fail to file accurate information returns with the IRS or provide correct payee statements to employees. Penalties vary depending on how quickly errors are corrected. For instance, if corrected within 30 days of the deadline, the penalty may be $50 per form, with an annual cap of $588,500. Corrections made after August 1 increase penalties to $310 per form, with a maximum of $3,532,500 for large businesses.

In addition to financial penalties, missed deadlines can attract audits and heightened scrutiny from tax authorities, leading to a more burdensome compliance process and potential reputational harm. If the failure is due to intentional disregard, the penalty increases to at least $630 per form, with no annual cap. These potential consequences underscore the importance of timely and accurate ACA reporting.

Strategies for Timely Filing

Timely ACA reporting requires preparation and organization. Employers should establish a clear timeline aligned with IRS deadlines to allow sufficient time for data collection, verification, and submission. Integrating these deadlines into the organization’s broader financial calendar can help prioritize reporting tasks.

Using technology can streamline the process. ACA compliance software automates data collection and form preparation, reducing errors and ensuring accuracy. Features like automated alerts and real-time tracking help keep reporting on schedule. Integrating such tools with payroll and HR systems further enhances efficiency by minimizing manual data entry.

Training staff is also essential. Regular training sessions ensure employees stay informed about ACA requirements and regulatory changes, empowering them to manage reporting confidently. Designating a dedicated ACA compliance officer provides accountability and ensures consistent adherence to reporting obligations.