As the Affordable Care Act (ACA) continues to shape the healthcare landscape, employers may find themselves wondering: "Do I need to complete ACA filing?" and “When do I have to worry about ACA compliance?” This comprehensive guide will clarify which employers are required to file ACA forms, why it's needed to avoid fees, and what to do if you've missed previous filings.
How to Know Which Employers Need to Complete ACA Filing
The 50 Full-Time Employee Threshold
The primary factor determining whether an employer needs to complete ACA filing is the number of full-time employees and full-time equivalents (FTEs). Employers with 50 or more FTEs are considered Applicable Large Employers (ALEs) and must comply with ACA reporting requirements. On the other hand, employers with fewer than 50 FTEs are generally exempt from ACA filing obligations.
It's important to note that this threshold can fluctuate from year to year. If your company is growing, you'll need to monitor your FTE count closely to ensure you comply when you reach ALE status. Learn more about managing cases like seasonal employees or temporary hires here.
What Counts as a Full-Time Employee?
Under the ACA, a full-time employee is someone who works an average of at least 30 hours per week, or 130 hours per month. It's important to note that part-time employees can contribute to your full-time equivalent count. The IRS provides a specific calculation method to determine your FTE count, which includes part-time employee hours.
For example, if you have 40 full-time employees and 20 part-time employees who each work 15 hours per week, your FTE count would be: 40 + (20 x 15 / 30) = 50 FTEs
In this case, you would be considered an ALE and required to complete ACA filing.
Self-Insured Employers
There's an important exception to the 50 FTE rule: self-insured employers of any size must complete certain ACA filings, regardless of their number of employees. If you offer a self-insured health plan, you're required to report information about all employees, dependents, and spouses enrolled in your coverage.
Self-insured employers that are not an ALE will use a different form (1094-B and 1095-B) than the one used by the ALEs. The requirement is to provide a form and file with the IRS for every employee who enrolled in the healthcare plan, regardless of full-time status.
What Forms Do ALE Employers Need to File for ACA Compliance?
Employers who meet the filing requirements typically need to submit two key forms:
- Form 1094-C: This is the transmittal form that provides summary information about your organization and the offered health coverage. Think of it as a "cover sheet" for your ACA filing.
- Form 1095-C: This form details the health coverage offered to each full-time employee. You'll need to file one for each employee.
Self-insured employers may also need to file Form 1095-B for certain covered individuals, such as retirees or COBRA recipients who were not full-time employees during the year.
Why Compliance Matters
Failing to file required ACA forms can result in significant penalties. The IRS may impose fines for not meeting ACA requirements, late filing, or inaccurate reporting. These penalties can quickly add up, making it important for employers to understand and meet their obligations.
For instance, the penalty for failing to file a correct information return is a couple hundred dollars per return, with a maximum penalty of over 3 million per year (or a little over 1 million for small businesses). The penalties for intentional disregard are even higher.
Back-Filing: What If You've Missed Previous Years?
If you've recently realized that you should have been filing ACA forms in previous years but didn't, don't panic. The IRS allows for back-filing, and it's always better to file late than not at all.
Here's what you need to know about back-filing:
- No time limit: There's no statute of limitations on back-filing ACA forms. You can file for all years you were required to but didn't.
- Penalty reduction: While you may still face penalties for late filing, the IRS often reduces penalties for employers who voluntarily come forward to correct their filings.
- Seek professional help: Back-filing can be complex, especially if you're filing for multiple years. Consider seeking help from a tax professional or using specialized ACA reporting software to ensure accuracy.
Remember, it's crucial to address any missing filings as soon as possible to minimize potential penalties and demonstrate good faith compliance efforts to the IRS.
Simplifying ACA Compliance
Managing ACA reporting can be complex, especially for growing businesses or those with variable-hour employees. That's where ACA compliance software like ACA Reporter can help. Such tools can track employee hours and status, generate required forms, and facilitate electronic filing with the IRS. By automating these processes, employers can ensure accuracy and timeliness in their ACA reporting, reducing the risk of costly penalties.
ACA software solutions like ACA Reporter include features and dedicated specialists to help with back-filing, making it easier to catch up on missed years of reporting.
Interested in learning more about ACA Reporter? Contact us here!
Key Takeaways
Understanding your ACA filing requirements is essential for maintaining compliance and avoiding penalties. Here are the main points to remember:
- Employers with 50 or more full-time and full-time equivalent employees must complete ACA filing.
- Self-insured employers of any size have filing obligations.
- Compliance is crucial to avoid significant penalties.
- If you've missed previous years' filings, back-filing is possible and advisable.
- ACA reporting software can simplify the process, ensure accuracy, and assist with back-filing.
If you're unsure about your obligations or need assistance with ACA reporting, consider consulting with a compliance expert or exploring ACA reporting solutions tailored to your business needs. Stay proactive in your ACA compliance efforts to protect your business from potential penalties and ensure you're providing the required information to your employees and the IRS.
