This coming Monday, February 28, is the deadline for paper filing ACA Forms 1094-C and 1095-C to the IRS for the 2021 tax year.
As a reminder, Applicable Large Employers (ALEs) with fewer than 250 1095-C forms can opt for the paper filing option for satisfying their ACA reporting requirements.
If you’re paper filing your ACA information for the 2021 tax year and looking to make the deadline next week, then your filings should be in the mail already. If your returns aren’t yet in the mail, then you should electronically file your ACA information with the IRS. There are considerable benefits, including more time to file, immediate acknowledgment of filing completion, and indicators of any filings errors.
To make the paper filing scenario even less feasible, the IRS is currently experiencing a massive paper-mail backlog. The backlog has significantly impeded the agency’s ability to process tax information. The challenge with paper filing your ACA returns this year is that they could very well arrive late or not all.
If you’re still not convinced that paper filing your ACA returns is a less than optimal solution, the agency is currently considering a proposed rule that would drop the threshold of returns for paper filing to 100 this year. By 2023 and every year thereafter, the threshold would decrease to 10 returns. In other words, the paper filing option could be phased out by the IRS as soon as next year.
Still – paper filing your ACA returns is better than not filing at all. Employers would be wise to double-check their filings to ensure they’re capturing all the necessary data points. Below we outline the information you should review before filing.
Form 1094-C
The 1094-C form is essentially the cover sheet for your ACA filings and should specifically capture:
- The physical address of the reporting ALE, the best phone number, and the employer’s identification number (EIN)
- Total number of 1095-C forms included with the 1094-C transmittal
- Designated point of contact
- Any associated organizationsÂ
- Eligibility certifications, such as the qualifying offer method and the 98% offer method
Form 1095-C
The 1095-C form documents individual coverage for an employee throughout the reporting year and includes:
- Employee census details, such as name, primary residence, SSN, and date of birth
- The lowest-cost monthly contribution amount for the employee
- Any applicable safe harbors for proving the coverage is affordable
- The months of the year the coverage was available for enrollment
As a reminder, reporting healthcare information to the IRS is a key component of complying with the ACA’s Employer Mandate.Â
Under the ACA’s Employer Mandate, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees must:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); andÂ
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability.
Failing to transmit the information above in your annual ACA returns could result in significant penalty assessments from the IRS, which are increasing this year.Â
If you need assistance meeting the ACA reporting deadlines this year, contact us to learn about our various ACA solutions. We’ve helped our clients prevent over $1 billion in ACA penalties ensuring they’re compliant before they file.
For information on how to accurately code your 1095-C forms, download the Employer’s Guide to Coding ACA Form 1095-C below.
