What You Need To Know About 2019 ACA Reporting
The ACA’s employer mandate is still in place in 2018, requiring applicable large employers (ALEs) to provide a certain percentage of their full-time-equivalent employees with minimum essential coverage. In 2018, ALEs are defined as any business that employed a combination of 50 or more FTE employees six months or more in 2017.
The Employer Shared Responsibility Provision (ESRP) of the Affordable Care Act penalizes employers with 50 or more full-time equivalent employees who either do not offer coverage or do not offer coverage that meets minimum value and affordability standards.
As you prepare to report to the IRS regarding the health insurance you offered employees in 2018, take note of these notable changes:
Tax Forms Now Require Indication of Coverage
In prior years, the IRS accepted and processed returns without health coverage being indicated, however starting in 2018, the IRS will NOT process individual tax returns unless taxpayers indicate whether they have health coverage. According to the IRS, “This change in process reflects the requirements of the ACA and the IRS’s obligation to administer the health care law.” Electronically filed tax returns that do not indicate whether the individual had health coverage for the prior year will NOT be accepted. Also, paper tax returns that do not confirm compliance may be suspended, and any refunds due may be delayed.
Employees will be required to indicate whether they and their family members had coverage or whether they qualified for an exemption during the filing year. Employees will need to use the information on their 1095-C forms to substantiate healthcare coverage for themselves and any covered family members when filing their tax returns. This is another reason why it is extremely important for employers to comply with ACA requirements and provide correct and complete forms in a timely manner this reporting year.
ACA Limits and ACA Penalties
We all should know by now that applicable large employers (ALEs) are required to offer affordable, minimum value health coverage to their full-time eligible employees, or pay ACA penalties. As in previous filing years, employers will likely see an increase of the ESRP penalties for the 2019 filing year. For 2018 filing, the sledgehammer penalty has been increased to $2,320 annually per full-time employee (minus the first 30 FTEs). The tack-hammer penalty has been increased to $3,750 annually per full-time employee who receives a tax credit.
The ACA requirements indicate that health coverage is considered affordable if the employee’s plan contribution does not exceed a set percentage of the employee’s household income for the tax year. Employers should note that the affordability threshold percentage has increased to 9.86% for the 2019 filing year. Therefore, for your medical plan to be considered affordable, it should not exceed this amount.
Distribution of forms to employees
Employers subject to the Affordable Care Act (ACA) must distribute reporting forms to employees and file with the IRS early in 2019.
Below are links to the final forms and instructions on the IRS website:
Form 1095-B, Health Coverage.
Transmittal Form 1094-B to accompany Form 1095-B.
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
Transmittal Form 1094-C to accompany Form 1095-C.
IRS 226-J Letters Will Continue
The IRS has already begun sending 226-J assessment notices for the 2015 and 2016 filing years. They are also expected to continue enforcing the employer mandate by sending the assessment notices for future tax years. It is critical that your company maintain its ACA compliance now more than ever to avoid ACA penalties in the future. It is also essential for employers to know what steps should be taken should they receive a letter from the IRS.
Key Factors That Have Remained the Same with IRS ACA Reporting
During the 2019 filing year and future years, employers must continue to:
Provide affordable coverage that meets minimum value to all full-time eligible employees
Actively manage employee eligibility for the entire calendar year
Timely file and furnish accurate and complete 1094-C and 1095-C forms
How Hollis Companies Can Help
To prepare for 2019 ACA reporting, employers should take time to review the upcoming requirements and cultivate a strategy for compliance. Hollis Companies can help you with that strategy and help to ensure that you remain in ACA compliance. With over 30 years of Employee Benefits experience, Hollis Companies can help you remain current on all tax and reporting requirements. Call us today at (504) 828-6400, email us at firstname.lastname@example.org or visit our website at www.holliscompanies.com.