IRS Requirements for ALEs
ALEs (Applicable Large Employers) are compelled to provide health coverage to their employees (and their employees’ families) under the ACA (the Affordable Care Act). If 95% of the employees of ALEs do not receive the necessary health coverage, then the employers will have to give a potential tax penalty. Moreover, as evidence, the ALE’s are required to submit Annual reports to IRS regarding the medical plans provided, enrollment and coverage cost. The employees will receive a written statement too.
To identify ACA requirements, employers must pay their companies’ FTE (full-time employee) count. ALE’s are those companies which have 50+ FTEs on a normal working day basis.
Who are considered FTE’s?
FTE count has those workers who are considered employees under the standard of the common law. Some confusion includes their related partners, shareholders, seasonal workers and other groups. A 2% S corporation shareholder, a sole proprietor or partner are not included as FTEs.
Any employee that works outside of the U.S. is excluded.
Seasonal workers have employment limit of 120 days. These employees are hired for a specific period and tasks against a contracted amount. Internees may come under this category, and Seasonal workers must be counted as FTE’s. Though, it must be noted that companies will not be identified as ALE’s who have 50+ seasonal workers or has 50+ FTEs with no work more than 120 days. They shall be excluded from the calculation of the four-month calendar period if so.
If a company is a subsidiary, then all the companies’ workers will have to be aggregated for the final calculation.
Paperwork Requirements for ALE’s
Since 2015, all FTE’s must receive IRS 1095-C forms from their employers annually. There have been certain changes made in the 1095-C forms this year, and hence it is advised to all employers and coverage form recipients double-check to ensure, they have the updated version. Now the updated version has an extra page, so it is essential to collect new required data to fill the forms. The form gives detailed information about the coverage plan and costs that the employee shall receive from ALEs. The 1095-C form will also inform if an employer chooses not to give an insurance plan. Companies are required to forward coverage information to the IRS as well.
Furnishing of Forms 1095-B and Penalty relief
The IRS has considered the need of giving penalty relief to some extent to ALEs for 1095 B furnishing. The individual shared responsibility mandate is now zero. Taxpayers do not necessarily need this form for individual returns. The law, however, still has made filing of 1095 B forms to the IRS a compulsion. Refer to the 6055 furnishing relief section for further details regarding the penalty relief.
Two penalty waiving conditions according to the IRS must be noted:-
- The reporting ALE furnishes the form 1095 B to any responsible party within 30 days of the date the request is received.
- A prominent notice is posted by the reporting party on their website that 2019 1095 B forms will be received by the responsible individuals. The email address and physical address to where a request may be sent must also be mentioned and highlighted.
AIR (ACA Information Return) Program
Files must be made electronically by ALEs issuing more than 250 information returns for efficiency and content safety. The online ‘Air user Guides and Publications’ section can be referred to for detailed information regarding transmission formats, validation procedures, business rules and communications procedures for the electronic filing of the information returns.
Other Resources and Legal Guidance
The Legal Guidance and resources page can give information/resources such as the following:-
- ACA filing statistics
- Facts sheets and News releases
- Podcasts, Webinars, Youtube videos, relevant Social media updates
- Legal Guidance such as Treasury Decisions, Notices, revenue procedures, revenue rulings and other announcements
- Flyers, Publications, Trifolds, Additional materials and Health care tax tips.
It is recommended that ALE’s should bookmark the page in case of any need. Information can be received from such resources or the IRS website instead of an email directly to IRS officials. The IRS may be untenable to respond to any such inquiry emails untimely.
It is suggested that ALE’s should research about latest updates regarding IRS forms and policies to ensure, no important notices are missed.
Many companies rely on ACAreporter for their reporting needs. If you need any assistance in ACA reporting. Contact us!
