Beware of Traps for the Unwary in Preparing ACA Information Returns (Part 1)

Beginning in 2015, certain applicable large employers may be assessed a payment as part of the “employer shared responsibility” provisions of the Affordable Care Act (ACA). Payment is assessable if the employer either (1) does not offer minimum essential coverage to its full-time employees (and their dependents) or (2) the coverage offered is not affordable or does not provide minimum value, and one or more full-time employees receive a premium tax credit to purchase coverage on an ACA exchange.

To facilitate assessment of employer shared responsibility payments, certain information reporting rules apply to providers of minimum essential coverage, including self-funded plans and applicable large employers. The extensive rules are contained in the regulations implementing Section 6056 of the Internal Revenue Code, IRS Q&As on Section 6056, the instructions to the Form 1094-C transmittal and the 1095-C information statement (together referred to as the “Information Return”), and the Q&As on Forms 1094-C and 1094-C.

This three-part series of posts will highlight traps for the unwary in preparing the ACA Information Returns. Here are a few tips to start off:

  1. Information statements must be furnished to employees by no later than January 31 (February 1 for 2016 because January 31, 2016, is a Sunday), and information returns must be filed with the IRS by no later than February 28—or March 31 if filed electronically (February 29, 2016, because February 28, 2016 is a Sunday or March 31, 2016 for electronic filers).
  2. For Information Returns filed for 2015, no penalties will be imposed for those who show good faith efforts to comply with the information reporting requirements. But no relief is available if you fail to timely file an Information Return or statement.
  3. Information is reported for a calendar year, regardless of whether the plan operates on a non-calendar year plan year. Put differently, a non-calendar year plan might have to report on Forms 1094-C and 1095-C information from two separate plan years.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.