ACA Filing Rules Change: How You Can Be Prepared

Get ready, a significant change is here for this ACA filing season, and it requires certain filers to e-file in the beginning of 2024. But first, some background information on ACA filing.

The Affordable Care Act (ACA) created reporting requirements under the Internal Revenue Code Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about the health plan coverage they offer, or in some cases, do not offer, to their employees.

The ACA requires applicable large employers (ALEs), generally those with 50 or more full-time equivalent employees, to report certain information to the IRS annually. This reporting helps ensure compliance with the ACA’s employer shared responsibility provisions and allows the IRS to administer premium tax credits correctly.

According to the original rule, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically. But on February 23rd , 2023, the IRS released a final rule implementing a law change by the Taxpayer First Act of 2019, which lowered the 250-return threshold for mandatory electronic reporting to 10 returns. Therefore, most reporting entities will be required to complete their ACA reporting electronically starting in 2024.

The size of the employer determines what ACA rules will apply to that employer. An employer’s size is generally determined by the number of its ACA full-time employees (FTEs,) including full-time equivalents.

If an employer has 50 or more FTEs, including full-time equivalent employees, the employer is an Applicable Large Employer (ALE) and needs to issue statements to employees and file an annual information return, reporting whether and what health insurance the employer offered employees for the reporting year.

As an employer, you may need an ACA vendor if you:

• Are between 50 and 250 ACA Full-time employees;
• Are part of an ALE (Applicable Large Employer), i.e., employers with 2 EINs or more, OR, have over 50 ACA full-time employees;
• Have previously paper-filed your returns with the IRS.

Regardless of size, all employers that provide self-insured health coverage to employees must file an annual return, reporting certain information to IRS for each covered employee and must provide the same information to covered individuals.