Despite the results of the election, compliance with the ACA goes on, unless and until Congress takes action. Even then, odds are that changes to the ACA will take time to be implemented.
As such, with 2016 drawing to a close, employers are reminded that they have to calculate whether they will be an Applicable Large Employer (ALE) for 2017. An employer who is an ALE has employer shared responsibility requirements under the Affordable Care Act (ACA).
Employers with 50 or more full-time and full-time equivalent employees during the previous year are deemed to be ALEs (applicable large employers) who must report to the IRS and to employees. Therefore, employers who averaged 50 or more full-time and full-time equivalent employees during the calendar year 2015 are considered ALEs for 2016 and must report in 2017. Reporting in 2017 reflects enrollment and offers of coverage for 2016.
Employers who meet the ALE definition must report whether or not they offer an insured or self-insured health plan. Employers who meet the ALE definition must report even if they don’t offer any health coverage to employees. And, employers who are too small to be ALEs, but who offer self-insured health coverage, must report to the IRS regarding coverage offered to their employees.
The deadlines for reporting for coverage year 2016 are as follows:
- Deadline to distribute forms to employees and covered individuals will be January 31, 2017
- Deadline to file paper forms with the IRS will be February 28, 2017
- Deadline to file electronically with the IRS will be March, 31, 2017.
The requirement to furnish the Form 1095-C is met if the form is addressed and mailed on or before the due date. Statements must be mailed or hand delivered unless the recipient has affirmatively consented to receive the statement electronically.
Employers can obtain an automatic 30-day extension of time to file forms to the IRS by completing Form 8809 — Application for Extension of Time To File Information Returns. This form must be filed in advance of the due date for the returns. It should be filed as soon as an employer determines that an extension of time is necessary.
An extension of time to furnish statements to employees is not automatic. A letter requesting an extension must be sent to the IRS. Instructions on filing for this extension are found on page 6 of the instructions for Forms 1094-C and 1095-C. The instructions can be found here.
Penalties for failing to report or making errors in reporting can be sizeable. It’s important to note that the IRS will no longer operate under a “good faith compliance” standard for this year’s reporting.
- The penalty for failure to file a correct information return is $260 per return
- The penalty for failure to provide a correct payee statement is $260 for each statement with the failure
- There are limits to the size of the penalties unless there is “intentional disregard” to file and furnish the required statements.
Penalties may be waived due to reasonable cause. However, ignorance of the requirement to file is unlikely to gain a penalty waiver. As such, employers who discover that they should have filed this past year would be wise to file as soon as possible or consult with tax advisors.