Affordable Care Act in 2020: What do Employers Need to Know?Updated December 9, 2020

The last few years have been a roller coaster for the Affordable Care Act – the late 2018 shock being the Texas ruling around the constitutionality of the ACA. Such turmoil still has people asking: will it stay or will it go?

The short answer is: The ACA remained in force for 2019 and remains intact for 2020, especially as it relates to US employers.

Employer Health Insurance Requirements

NOW is the time to focus on 2020 ACA reporting for the IRS!

The ACA employer mandate is in force for 2020: US employers with 50 or more full-time employees were required to offer these full-time workers compliant health coverage. Now these employers must also provide proof of that offer of coverage to the IRS with year-end forms 1095-C and 1094-C.

Since the employer mandate is still in force for 2020, this means employers also need to comply with the ACA coverage mandate. So employers should continue offering health coverage that provides:

  • Minimum Essential Coverage (MEC)
  • Minimum Value (MV): the plan must pay at least 60% of the benefits cost
  • Affordability: A plan is considered affordable if the employee’s required contribution does not exceed 9.86% (this amount is adjusted annually based on the federal poverty line %).

Important ACA Deadlines:

  • 1095-Cs need to be provided to employees by February 1, 2021 March 2, 2021 (date extended).
  • Forms 1094-C & copies of the 1095-Cs need to be filed with the IRS
    • Paper filing needs to be done by March 1, 2021 OR
    • Electronic filing (required for employers with more than 250 1095-Cs) must happen by March 31, 2021.

Also good to know: Good Faith transition relief extended to 2018 reporting.

This means that employers who work in good faith to complete the forms will not be assessed penalties due to missing or inaccurate information. This relief does not apply if the employer failed to furnish forms or timely file, only for missing or inaccurate information reported on the ACA forms.

Make sure your reporting is done accurately and timely – Integrity Data’s ACA Compliance Solution can help.

ACA Employer Mandate stands: continue tracking throughout 2020

Employer obligations remain unchanged and enforcement has started: a significant number of employers have received letter 226J aka “a penalty letter” from the IRS – here’s some advice on what to do if you get one of those.

What changed for 2020?

The Individual Mandate was effectively repealed as of January 1, 2019

The Tax Cuts and Jobs Act (aka the new tax law) touted repealing the health law but it only repealed the requirement that individuals are required to have ACA-compliant health coverage or else pay a penalty in the sense that the penalties are reduced to zero.

Here’s what that could mean for employers.

As part of the recent deal to reopen government, two important ACA changes were made that affect employers:

  1. Cadillac tax has been delayed for 2 more years until 2022.
    This unpopular tax on high cost health coverage (40% tax on the value of coverage over specified thresholds) had already been pushed out – and now it is being pushed out again. Take a breather but start thinking about cost containment strategies to avoid this tax when it does go into effect.
  2. Health Insurer tax was suspended for 2019.
    This health insurance “provider fee” is tax levied on the health insurers based on the premiums they collect – this cost would most likely be passed on to consumers. It was suspended for 2017, came back for 2018 and is now suspended again for 2019 – good news for employers that purchase insurance coverage since it will most likely mitigate insurance premium increases for 2019 renewals.

What’s next for ACA employer reporting?

Plan on ACA reporting for 2020 and beyond

Reporting for 2020 is certainly required and given the IRS’s clear intention to enforce the mandate, and the appeal process for the Texas ruling to take a while, expect reporting to continue into 2021 and possibly beyond. Make sure you have the systems and processes in place to do so accurately and efficiently – Integrity Data’s ACA services can help.

Keep an eye on developments in 2020

There may be at least a softening of the employer mandate – for example, making the reporting easier for employers by simplifying it. This won’t happen quickly but it is definitely worth keeping an eye on by following our ACA Tracking and Reporting Compliance blogs.

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