It’s almost that time of year for employers—preparation for health care coverage reporting to the IRS and employees. Although the fate of the Affordable Care Act has been in the news throughout the year, employers are still obligated to report 2017 health care coverage costs. iSolved has built-in ACA compliance and reporting tools, making it easy to handle these requirements.
The ACA requires Applicable Large Employers (ALEs)—employers with at least 50 full-time equivalent employees in the previous year—to report health coverage information required under Sections 6055 and 6056 of the tax code on Forms 1095-C and 1094-C. The forms help to determine whether a company owes a payment under the “employer shared responsibility” provisions of Section 4980H or if employees are eligible for the premium tax credit.
Employers are also required to file Form 1095-B and transmittal Form 1094-B, which document employer offers of minimal essential coverage during the previous calendar year.
Instructions for 2017 Forms 1094-C and 1095-C state that employers that fail to file forms with the IRS, fail to provide forms to employees, or submit incorrect information returns face a $260 penalty per form. The same penalty applies to Form 1094-B and 1095-B reporting.
2018 Reporting Deadlines
- Forms 1095-B and 1095-C must be submitted to employees by Jan. 31, 2018.
- Forms 1094-B and 1094-C with copies of 1095-B and 1095-C must be submitted to the IRS by paper by Feb. 28, 2018.
- Forms 1094-B and 1094-C with copies of 1095-B and 1095-C must be submitted to the IRS electronically by April 2, 2018.
The filing season for 2017 was only three months. In 2016, employers had six months to prepare and file their returns. The IRS provided filing extensions for the 2016 reporting season but did not provide extensions in 2017. However, employers that applied for a 30-day extension were approved, with the option of a second 30-day extension.
Employers who would like to request an extension for the 2018 filing season must file Form 8809.
Improvements to the Filing Process
Each year, the IRS has been making changes to the form filing requirements, with an end goal of making the reporting process easier and reducing the number of incorrect form submittals. The IRS reported in June of this year that the agency saw a reduction in the number of overall form rejections and forms that were accepted with errors.
The IRS form rejection rate fell to 1 percent in 2017, compared to 4.5 in 2016, and the number of information returns accepted with errors fell from 6 percent to 3.8 percent.
Fewer Exceptions for Employers in 2018
In 2016, the IRS made some exceptions to the 2015 form filing rules to assist employers as they completed the forms for the first time. These included waiving penalties for incorrect or incomplete information (good-faith reporting), allowing ALEs to offer coverage to 70 percent of full-time employees and dependents (transitional relief), and a two-month deadline extension when providing health coverage forms to employees and the IRS.
However, those exceptions were eliminated in 2016 and employers should not expect them to return for 2017 filing.