By The ACA Team
We did it! We made it through another year. And the 2020 ACA filing year was just as unexpected as the rest of 2020. This year, the due date for furnishing Form 1095-C to employees was extended from January 31, 2021, to March 2, 2021. Forms were then due to be filed by March 31, 2021. We continue to monitor ACA publications and expect that the 2020 filing year was the last year to get a filing extension.
Below are some helpful lessons we learned over the year and years past. We’re sharing them with you so we can all be prepared for the coming year.
One
Rate changes. Let us know if rates change at any time during the year! This affects line 15 on Form 1095. Remember, the IRS requires you to report the lowest single plan cost available to an employee or group. Therefore, do not be alarmed if John Doe is enrolled in the Gold Family plan and his 1095-C form line 15 shows the monthly cost for the Bronze plan. However, if there are fewer – or more – plans available for an employee or the line 15 appears wrong, please make sure to notify us as soon as possible. We can always correct it and re-transmit the affected forms to the IRS.
Two
Returning employees. If an employee returns to your employment after 13 weeks (or 26 if you’re an educational institution), let us know their rehire date. Your forms will be more accurate this way.
Three
ICHRA. 2020 was the first year when the IRS required reporting for ICHRA (Individual Coverage HRA). The reporting is confusing and has lots of rules, so make sure to review our webinar before your 2021 filing. If your organization is thinking of introducing ICHRA, let us know as soon as possible.
Four
State filing. Although state filing was introduced in 2019, 2020 was the first year when more states started requiring additional filings. And of course, each state chose different modes and formats of reporting. In 2020, we helped our self-insured clients to complete state filing since the burden falls on the self-insured clients. If you’re fully insured, the burden falls on the coverage provider…or so we thought! We learned that not all coverage providers “chose” to engage in state filing. Please let us know right away if that happened to you – we will work with you to make sure your 2021 state filings are taken care of.
Five
226J. The 226J is the initial notice issued by the IRS to an employer to let them know about potential liability for an Employer Shared Responsibility Payment (ESRP). This notice is triggered by an employer offering an employee coverage that was unaffordable based on their rate of pay. The employee then waived that coverage and applied for subsidized coverage through the Exchange. So now the government wants their money back! Contact us as soon as possible so that we can review the information on Forms 1094-C and 1095-C and help you with the appropriate response to the IRS.
Six
Make sure all data matches. This seems obvious, but you’d be surprised at how easily it’s overlooked! If someone changes their name during the year, make sure your systems match the Social Security Administration information. This is especially important to ensure your filing is not rejected for a name or SSN mismatch. Similarly, make sure someone’s work status is correct. It’s easy to accidentally switch someone from full-time to part-time and vice versa, but it’s very important – for your liability – that that information is correct. And don’t change an employee’s bargaining unit (aka health insurance enrollment group) mid-year without letting us know. If you happened to miss a name change or provide an incorrect SSN, we can send corrections to the IRS. For more information on how to correct 1095-C IRS AIR errors, please feel free to listen to a recording of our webinar on that here.
Seven
Terminated employees. Make sure terminated employees are reflected in your monthly data files! This means making sure you’ve terminated them in all systems you have, they are marked inactive, and they all have a termination date. And make sure you have provided us with those termination dates. Termination dates are important because the number of total active employees per month is reported to the IRS at the beginning of each year on Form 1094-C. Therefore, if employees are not properly terminated in the data you give us, Form 1094-C that is generated for you will have incorrect numbers. This will also affect the employees’ 1095-C forms. If an employee has termed during the year, we need the 1095-C form to reflect only the months that they were employed by you. Also remember that you are liable for employee coverage if they are not properly termed and appear as active. If you have multiple EINs and transfer employees between them (essentially terminating them from one employer to move to another), make sure to let us know when those changeovers happen.
Eight
Ask questions. If you are new to ACA or if you forgot why we ask for certain information or why we provide certain reports, please reach out. We are here to answer your questions! Remember that we don’t have access to your internal systems, so we rely on the data you provide to us. If we get out in front of issues early on, we will eliminate frustration and extra work for you during the busy filing season. If your team has a new person who is not familiar with ACA or if you would like a refresher, visit our website to view an overview presentation and to check out other services we offer.
Thank you again for your diligence and commitment to compliance. We look forward to another great year!