The 2019 ACA compliance reporting season is in full swing and staying up-to-date with changes is critical to the success of employers. The following is a summary of changes that are pertinent to the 2019 tax year. The primary take-away from this information – employers are still required to comply with the ACA and not doing so will result in significant penalty from the IRS.
ACA Penalty amounts continue to increase each year. For the 2019 tax year, the penalty for failure to furnish forms to eligible employees and to the IRS is $540/form. If employers fail to offer a compliant health plan to eligible employees, the penalty can be up to $2,500/employee annually. If employers do offer a compliant plan, but it’s not affordable or offers minimum value, the penalty is $3,750/employee annually for employees that obtain a premium tax credit. Read more about this in our blog “Manage ACA compliance for Tax Year 2019: Know the IRS penalty risks.”
The rate for determining whether or not an employer-provided health care plan is affordable to employees was set at 9.86% for plan years beginning in 2019. Read more about the affordability calculation in our post “A Guide to 2019 ACA Affordability Percentages for Employers – with Affordability Calculator!”
The 2019 Form 1095-C and 1094-C were released in their final version on December 8, 2019. The form changes were limited to the year from 2018 to 2019. Also, the instructions for employees did have minor changes. The two most notable changes were:
Paragraph 2 of the 2019 Instructions was changed to:
“In addition, if you, or any other individual who is offered health coverage because of their relationship to you (referred to here as family members), enrolled in your employer’s health plan and that plan is a type of plan referred to as a “self-insured” plan, Form 1095-C, Part III, provides information to assist you in completing your income tax return by showing you or those family members had qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year.”
A “Caution” was removed for Line 2 information:
“If you do not provide your SSN and the SSNs of all covered individuals to the plan administrator, the IRS may not be able to match the Form 1095-C to determine that you and the other covered individuals have complied with the individual shared responsibility provision. For covered individuals other than the employee listed in Part I, a Taxpayer Identification Number (TIN) may be provided instead of an SSN. See Part III.”
Form Instruction Changes
There are no substantive changes to instructions for completing the 1094-C and 1095-C for the 2019 tax year.
On December 2, 2019, the IRS released Notice 2019-63 outlining three important statements in relation to ACA reporting requirements. This information is called out in the “What’s New” section of the 1094-C and 1095-C instructions.
- Extension of due date for furnishing statements. The due date for furnishing Form 1095-C to employees is extended from January 31, 2020, to March 2, 2020.
- Relief for failure to furnish statements to certain employees enrolled in self-insured health plan. The IRS will not impose a penalty for failure to furnish Form 1095-C to any employee enrolled in an ALE member’s self-insured health plan who is not a full-time employee for any month of 2019 if certain conditions are met.
- Extension of good faith relief for reporting and furnishing. The IRS will not impose a penalty for failure to file Form 1095-C with the IRS or failure to furnish Form 1095-C to employees if you make a good faith effort to comply with the information reporting requirements.
As always, you can rely on Integrity Data to be your main resource for HR and Payroll compliance information. If you need assistance completing your required 2019 ACA compliance and reporting, we’re here to help. If you’re interested in completely outsourcing your ACA reporting, we recommend signing up for a free ACA consultation with Integrity Data ACA experts. We also developed, continue to enhance, and provide support for our ACA Standard Self-Service compliance solution for employers. We’ve been experts in ACA since 2012, and we’re uniquely qualified to help you assess the best solutions for your business.