The Affordable Care Act (ACA) established new reporting requirements for applicable large employers (ALEs) to ensure they are providing quality, affordable health coverage options for employees. While well-intentioned, these new reporting rules have created additional administrative complexities for employers to navigate.
Each year, ALEs must track detailed data on the healthcare coverage offered to full-time employees. This includes information on who was offered coverage, and who enrolled in the plan or waived the offer. ALEs must also provide information on the lowest cost of coverage that meets the ACA requirements.
ALEs must produce 1094 and 1095 forms each year that contain the information required by the IRS. The purpose of these ACA forms is to demonstrate that employers are making an offer of coverage to all employees who require an offer and that the offer meets the ACA requirements for minimal essential coverage, minimum value, and affordability.
With numerous forms, codes, and deadlines to juggle, ACA reporting can quickly become a headache for HR departments and employers. Even small mistakes on forms can lead to penalties or rejected filings. This guide will walk you through the major reporting forms, who needs to file them, and what information must be included. Having a handle on what is required can help employers avoid missteps when filing ACA reports each year.
In general, Applicable Large Employers (ALEs) must file forms 1094 and 1095. An Applicable Large Employer is defined as an employer with 50 or more full-time employees. The FTE count for a company is calculated each month by adding all the hours worked by part-time, variable hour, and seasonal employees, up to a max of 120 hours per employee, and dividing the sum by 120. This value is then added to the count of employees who are designated as full-time.
However, there are some exceptions and nuances to these rules (though, these are subject to change):
So while the majority of filers are Applicable Large Employers, it's important for companies to understand if they meet the criteria and which specific forms apply to their situation. Reaching out to a knowledgeable advisor can help clarify.
Now that we’ve covered who is required to file 1094 and 1095 forms, let’s explore what these forms are used for.
The 1094 forms serve as transmittal documents for the 1095 series. The 1094 provides summary information across all the 1095 returns being submitted, such as:
The 1095 forms contain the actual employee and coverage data that must be reported to the IRS. There are three different 1095 versions:
Each 1095 form has specific codes to report detailed policy, offer, and coverage information for individuals. This data is used by the IRS to verify employers are meeting ACA requirements related to:
Accurately tracking and reporting data on the correct 1094/1095 forms applicable to your company is critical for avoiding penalties for non-compliance.
Form 1095-A is filed by the Health Insurance Marketplace to report information on enrollments in qualified health plans.
This form includes comprehensive information on an individual's enrollment such as:
Additional Key Details on Form 1095-A:
Providing this detailed information allows the IRS to verify eligibility and determine if individuals enrolled in Marketplace plans qualify for the premium tax credit.
Who Files: Health Insurance Marketplace
Form 1095-B is used by health insurance issuers, including non-ALE employers who offer self-insured coverage, and carriers to report detailed information on individuals enrolled in minimum essential coverage.
The comprehensive data includes:
Additional Key Details on Form 1095-B:
Reporting this information allows the IRS to verify individuals have the required health coverage.
Who Files: Health insurance issuers, including non-ALE employers who offer self-insured coverage, and carriers
Form 1095-C is a critical ACA reporting form filed by Applicable Large Employers (ALEs). It reports detailed information on healthcare coverage offered to full-time employees.
Comprehensive data on Form 1095-C includes:
Additional Key Details on Form 1095-C:
Who Files: Applicable Large Employers
As we’ve seen, ACA reporting requires multiple complex IRS forms. Tracking information and accurately filing these forms can be challenging and time-consuming for employers.
Fortunately, solutions like ACA Reporter simplify the entire process. ACA Reporter is a complete ACA tracking and reporting software. With ACA Reporter, you can:
ACA Reporter handles the heavy lifting of form calculations, tracking, and reporting so employers can ensure ACA compliance with less work.
Some key benefits of using ACA Reporter include:
For employers struggling with ACA reporting, ACA Reporter is a game-changer. The intuitive software and expert support team handle the hard parts so you can ensure full compliance with less effort.
To learn more about how ACA Reporter can simplify your ACA reporting, visit our website.