ACA Reporting: 2024 Electronic Filing Requirement
The filing requirement created with the launch of the Affordable Care Act (ACA) has changed for the 2023 tax year. Find out what you need to do to meet the 2024 requirement.
What Is ACA Reporting?
The Affordable Care Act (ACA) created mandatory reporting requirements for employers to disclose information about group health plan coverage to both plan participants and the IRS. This requirement is met by preparing and distributing 1094/1095 forms. (1095 forms are provided to employees, and the 1094 transmittal – which includes copies of the 1095 forms – is sent to the IRS.
How Is ACA Reporting Changing for 2024?
Since the inception of the ACA, small and mid-sized employers were permitted to mail their returns to the IRS, while large employers were required to file electronically. These rules have now changed and beginning in 2024 the electronic filing requirement applies to a broader range of employers.
Under the old requirements:
- Employers with LESS than 250 1094 & 1095 filings had the option to file either electronically or by mail.
- Employers with MORE than 250 1094 & 1095 filings had to file electronically.
Under the new requirements for 2023 returns filed in 2024:
- Employers with LESS than 10 aggregated form filings* have the option to file electronically or by mail.
- Employers with MORE than 10 aggregated form filings* must file electronically.
*The aggregate number of forms filed per year include W-2, 1099, 1094, 1095, and others listed in the IRS resource link at the bottom of this page.
Keep in mind, this new requirement does NOT expand the requirements on who must file. It merely expands the threshold for electronic filing. Employers with less than 50 Full Time Equivalent (FTE) employees that offer a fully insured medical plan are not impacted by these requirements because the fully insured carrier has and will continue to manage the filing obligation.
You can view this bulletin for details on these new reporting requirements.
Is ACA Reporting Mandatory?
Yes, the ACA includes provisions that make reporting mandatory for certain employers. Here are the key points:
Employers with 50 or more full-time employees, including full-time equivalent employees, are considered Applicable Large Employers (ALEs) and are required to report information about the health coverage offered to their full-time employees using IRS Forms 1094-C and 1095-C.
Employers of any size that provide self-insured health coverage must report information about the coverage provided to all enrollees using IRS Forms 1094-B and 1095-B. This requirement applies to employers that are not considered ALEs as well.
The purpose of this reporting is to enforce the ACA’s employer mandate, which requires ALEs to offer affordable health insurance that provides a minimum level of coverage to their full-time employees (and their dependents), or face a penalty. It also helps the IRS determine whether employees qualify for subsidies when purchasing coverage through the Health Insurance Marketplace.
Employers must send the 1095 forms to their employees by March 1, 2024 and must file these forms with the IRS by April 1, 2024.
What ACA Forms Do Employers Need to File?
ALEs must file the following forms:
- Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns): This form serves as a cover sheet for the Form 1095-C reports filed to the IRS. It provides a summary to the IRS about the ALE’s employment size, the offer of health coverage, and other required information.
- Form 1095-C (Employer-Provided Health Insurance Offer and Coverage): This form is issued to each full-time employee and details the type of health insurance coverage offered by the ALE, including whether the offer of coverage was made to the employee, the employee’s spouse, and dependents.
Employers of any size that provide self-insured health coverage must file forms regarding the coverage information for each individual receiving coverage under the plan. That includes:
- Form 1094-B (Transmittal of Health Coverage Information Returns): This form is the transmittal document that accompanies the Form 1095-B when filed with the IRS. It summarizes the filing of Form 1095-B for records.
- Form 1095-B (Health Coverage): This form is used to report information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren’t liable for the individual shared responsibility payment. It includes information on covered individuals and coverage periods.
What Action Does My Company Need to Take to Meet the New ACA Electronic Filing Requirement?
- Companies that are already filing electronically (regardless of size), will not need to act. Just file as you always have.
- Companies that perform their own electronic reporting should review the IRS’ ACA Information Returns Program for information on the reporting standards for composing and transmitting the required filings. This can be found at https://www.irs.gov/e-file-providers/affordable-care-act-information-returns-air
- Companies that have always mailed paper forms to the IRS need to consider how they will follow this requirement in 2024. Your payroll provider may have an option for you to consider.
Let W3 Answer Your ACA Electronic Filing Compliance Questions
Your W3 team is here to help. We can answer questions about this new rule and share third-party vendors should you wish to outsource the 1094/1095 filing obligation. Contact us today to make sure you’re staying on top of these new requirements.
Resource: IRS and Treasury issue final regulations on e-file or businesses | Internal Revenue Service