Tuesday, January 10, 2023

5 Takeaways for Employers about Mandated ACA Reporting

5 Takeaways for Employers about Mandated ACA Reporting


As a large business owner with 50 or more employees, you have many responsibilities at any given time. Among these responsibilities is meeting IRS requirements under the Affordable Care Act (ACA) by filing the proper forms each year.

Form 1095-C is the ACA form used by employers to report information about the health coverage they have offered their eligible employees during the tax year. This article provides a summary of the form and the requirements for filing it.


1. Eligibility Criteria for Filing Form 1095-C

There are two versions of Form 1095 available (1095-B and 1095-C), and the eligibility criteria to file them vary slightly. Form 1095-C should be filed if the following scenario describes your business:

If you are an employer with 50 or more full-time employees, you are considered an Applicable Large Employer (ALE), and you are required to file Form 1095-C and its transmittal form 1094-C to complete your ACA reporting.

Note: You are required to file a separate 1095-C form for each employee and provide them with a copy of the form.


2. Information you need to Report

The basic purpose of ACA reporting is to provide the IRS with the information needed to verify that you offered your eligible employees health insurance that was affordable and provided them with minimum essential coverage. In some cases, you may have also offered coverage to their spouse and dependents.

The information you report on Form 1095-C will primarily be regarding the health coverage you offered your employees during the tax year.

The following information is required on Form 1095-C:

  • The basic details (Name, SSN, and address) of your organization and the employee for whom you are filing Form 1095-C.
  • Information on the health care coverage you offered to the employee with ACA codes. (Check out the next section for more details about ACA codes)
  • The basic details for the individuals covered under your plan.

3. Figuring Out the Applicable ACA Codes

Many ALEs find that this is the most complicated part of the ACA reporting process with the most room for error. There are two sets of codes required for use on lines 14 and 16 of Form 1095-C.


Line 14 codes:

There are 21 codes (1A - 1U) to be entered on line 14. You must enter the applicable code based on the following factors:

  • Whether an individual was offered coverage
  • Type of coverage offered
  • Individuals covered under the plan
  • Months of coverage


Line 16 codes:

There are 9 codes (2A - 2I)to be entered on line 16, and you must enter the applicable one based on:

  • Employment status of the employee
  • Whether the employee was in a Limited Non-Assessment Period
  • Whether the ALE Member used one of the section 4980H affordability safe harbors or is eligible for multi-employer interim rule relief for the employee.

4. Deadlines to file and furnish the Forms

The IRS established separate deadlines for paper filers and e-filers to complete Form 1095-C filing for the 2022 tax year.

The paper filing deadline to file Form 1095-C is February 28, 2023, whereas the e-filers have an additional month to complete the filing, i.e., March 31, 2023.

Also, it’s important to note that the deadline for furnishing the recipient copies is March 2, 2023.


Ways to Complete 1095-C filing

Now that you have a better understanding of how to complete Form 1095-C, let’s take a closer look at the different methods for filing them with the IRS.

You can either paper file or e-file Form 1095-C with the IRS. However, the IRS has set a threshold on the maximum number of forms that can be paper filed. If you are required to file more than 250 forms in a year, you are required to e-file them.

E-filing provides a lot more flexibility than paper filing. Here are some of the advantages you can enjoy when filing electronically.

  • Lesscan paperwork
  • Quicker processing
  • Instant status updates
  • Increased accuracy

If you choose to e-file your forms, selecting an aca reporting software provider is crucial. Here is a quick checklist to help you, the answer to all three questions should be “yes”!

  • Are they authorized by the IRS?
  • Do they support all the required filings?
  • Do they have a reliable support system?

Hopefully, we have covered everything you need to know to begin your Employer- Mandated ACA reporting. Getting started early and choosing the right e-file provider will help you ensure that you file accurately and on time for the 2022 tax year!

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