Think you’re behind in ACA reporting? You’re not alone
We printed the ACA pay-or-play regulations the very day they were published: February 12, 2014. By that time, we already were students of the voluminous detail in the Affordable Care Act’s employer mandate. Our software had been in beta testing for more than a year. Its first commercial installation was just two weeks afterward.
It was two years ago this month – in February 2014 – that the IRS released tax-code regulations for the Affordable Care Act provisions known as “the ACA pay-or-play rules” for U.S. employers.
For those of us who had been following the drawn-out implementation of this part of a then-4-year-old law, getting to some of the fine print for its employer-compliance requirements presented a light-bulb moment: When those employers to whom the ACA applied finally could see the scope of detail required for ACA compliance, they would pay close attention to the regulations intensifying workplace reporting.
With so much to do at an unprecedented depth, the planning for compliance strategies, we thought, would surely become top-of-mind for ACA-affected employers.
Answering the question of whether to play by offering health insurance or to pay the penalty for offering no coverage rested – and still does rest, in part, on framing payroll and benefits data for a read on ACA penalty-risk management.
And, yes, some employers were proactive about ACA compliance back in February 2014. In fact, the first commercial installation of our ACA tracking and reporting engine was done two years ago this week.
This installation was for a large franchisee of a fast-food restaurant chain – a business whose ACA compliance team was aware that by offering limited or no health insurance, their company was vulnerable to substantial financial consequences for noncompliance when the penalty-assessment period for the ACA employer mandate would begin.
They knew they needed help in getting at their workforce data in new and exacting ways in order to avoid or minimize IRS non-compliance penalties. They understood their information systems had to be rewired. They appreciated that this process would not happen overnight.
other ACA-affected businesses were not as attentive to Affordable Care Act compliance back in early 2014.
And now, two years later – amid the first production and filing season for ACA returns, that disconnect persists.
As you recall, the period for which the IRS would start assessing ACA noncompliance penalties was supposed to begin January 1, 2014. But budget standoffs and the resulting sequestration, combined with a slowdown in publication of the respective reporting guidelines, led the IRS in July 2013 to delay the beginning of the penalty-assessment period for all employers to January 1, 2015.
What was intended with grace periods for ACA compliance
When the first break came in July 2013, the official statement of that grace period (IRS Notice 2013-45) said the “transition relief” was “intended to provide employers, insurers and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.”
18% of companies with 50-999 employees said they planned to file for an extension to the February 1, 2016 production deadline for 1095-Cs
32% of companies with 1,000+ employees said they planned to file for an extension to the February 1, 2016 production deadline for 1095-Cs
Given that the IRS granted the 60-day deadline extension for 1095-C production across the board, filing for additional time to produce 1095-C forms is not an option for any U.S. employer.
The upshot for employers still behind in ACA reporting
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“With the prior extensions, employers had significant time to prepare and perhaps change course to a compliant solution,” Stacy H. Barrow, an employee benefits attorney with Marathas Barrow & Weatherhead LLP in Boston, told us the afternoon in December 2015 that the IRS announced the 1095-C delay.
“Now,” Barrow said, “we just have a brief window for employers to be sure they’re in good-faith compliance with the reporting requirements for 2015.”
Sanity for Tax Year 2015
In the brief window before March 31, 2016, there still is time to produce the 1095-C forms required for ACA compliance in Tax Year 2015.