Despite multiple repeal attempts, the Affordable Care Act (ACA) is alive and well. Employers still have to report ACA information or face increasing penalties.
With ACA reporting still on HR professionals’ agenda, Sovos regulatory experts answer selected questions posed by viewers during a recent Society of Human Resources Management (SHRM) webinar. Their answers are here, broken down by subject.
Large or Small Employer Status
An employer’s filing status depends on the number of full-time workers it employs. Further details on many of the answers in this section reside in this IRS document.
What does ALE stand for?
Applicable Large Employer. If an employer falls under the definition of an ALE, then the following provisions of the Affordable Care Act apply:
- Employer Shared Responsibility Provision and
- Employer information reporting provisions for offers of minimum essential coverage
How does an employer determine if it is an ALE?
If an employer has at least 50 full-time employees (FTE), including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
If an employer has fewer than 50 full-time employees, is there any obligation to file any report?
Yes, if the employer offered employer-sponsored self-insured health coverage to employees, it will use Form 1095-B to report information to covered individuals about each person enrolled in coverage. More information
How many hours is considered full time?
Averaging 30 hours per week or 130 hours per month is considered to be full time. More information
Is the requirement 50 employees or 50 FTE?
It is 50 FTE. If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
For ALE calculation, do only US employees count?
No, the calculation is based on all employees, not just US employees.
Does an employer with fewer than 50 FTE that doesn’t offer health insurance have to file anything?
If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year.
Employers who are not ALEs may be eligible for the Small Business Health Care Tax Credit and can find more information about how the Affordable Care Act affects them on the ACA Tax Provisions for Small Employers page. More information
What is the proper way to determine how many employees an organization has and whether or not the organization is exempt? For example, some organizations have seasonal employees, which changes the number of employees they have at any given time.
For purposes of the employer shared responsibility provisions, a full-time employee is, for a calendar month, an employee employed on average at least 30 hours of service per week, or 130 hours of service per month.
There are two methods for determining full-time employee status: the monthly measurement method and the look-back measurement method.
Under the monthly measurement method, the employer determines if an employee is a full-time employee on a month-by-month basis by looking at whether the employee has at least 130 hours of service for each month.
Under the look-back measurement method, an employer may determine the status of an employee as a full-time employee during what is referred to as the stability period, based upon the hours of service of the employee in the preceding period, which is referred to as the measurement period. The look-back measurement method may not be used to determine full-time employee status for purposes of ALE status determination. More information
Which is the right form for an employer that has fewer than 50 employees per month, per quarter but has more than 50 employees for the year?
If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions, which means the employer would use form 1094-C and 1095-C.
To determine its workforce size for a year, an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.
Penalties for late or incorrect ACA filings are now very real.
Should an employer that missed sending in a correction for 2016 do it now, and will there be a penalty involved?
Yes, the employer should still send in the correction, as that is part of the good faith effort required for any abatement letter to the IRS asking them to reduce or rescind any penalties. More information
Did the pay-or-play penalty go away?
The pay-or-play penalty has not gone away. ALEs are still held to the employer shared responsibility provisions requiring them to offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees. More information
What is the penalty for dependent names and Social Security numbers that don’t match IRS records?
Penalties vary depending on the size of the business, but there are no limits on penalties for intentionally failing to try and correct incorrect information returns. More information
And for more on penalties, read our blog entry.
Deadlines, Timelines and Other Questions
Between state and federal requirements, filing deadlines and timelines for correction procedures can be confusing.
What are the deadlines for forms to be updated and sent in?
Forms are due to individuals by January 31, and due dates for filing with the IRS are February 28 for paper filers and March 31 for electronic filers. More information
What is the complete timeline for TIN mismatches?
Publication 1586 includes the timeline for TIN solicitation with regards to ACA reporting. Essentially, though:
- The initial solicitation is made at an individual’s first enrollment, or
- The second solicitation is made at a reasonable time thereafter, and
- The third solicitation is made by December 31 of the year following the initial solicitation
Is there a deadline for corrections to be submitted?
There is no technical deadline, the IRS provides that corrections should be submitted as soon as possible. More information
When trying to solicit corrections for data submitted on employees who came back showing errors from IRS, if employees terminated before information could be obtained, what level of responsibility would the employer have to continue seeking the information needing correction?
A reporting entity is not required to solicit a TIN from an individual whose coverage is terminated. More information
Is there a central place to find if individual states will require additional ACA reporting or does each state site need to be individually checked?
Each state site would need to be individually checked as the reporting requirements will vary by state.
ACA reporting can be challenging and confusing. Learn how Sovos can enable your organization to cut through the clutter and get ACA reporting right, and avoid costly penalties.
Have a question about ACA reporting? Get in touch with Sovos.
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