Payroll
ACAwise Offers A Complete Solution For Meeting 2021 ACA Reporting Requirements
Employers must continue to follow the reporting requirements under IRS Sections 6056. Under this section the IRS mandates that all employers with 50 or more employees must offer Minimum Essential Coverage to their full-time employees or face an ...
Dec. 23, 2020
As we enter the new year, employers must begin to tackle their Affordable Care Act (ACA) reporting requirements, if they are considered an Applicable Large Employer (ALE). The IRS has implemented a few changes to the reporting process for 2021. ACAwise offers efficient and flexible solutions for e-filing and furnishing employee/recipient copies of the ACA Forms. For more information, please visit www.acawise.com.
Employers must continue to follow the reporting requirements under IRS Sections 6056. Under this section the IRS mandates that all employers with 50 or more employees must offer Minimum Essential Coverage to their full-time employees or face an employer shared responsibility payment (ESRP). This also mandates that these employers must report this information to the IRS on Forms 1094 and 1095 and distribute employee copies.
The main reason for many of the changes to 2021 ACA reporting is the inclusion of Individual Coverage Health Reimbursement Arrangements, or ICHRA. As of January 1, 2020, employers are now able to offer this type of healthcare reimbursement plan to their employees.
With this type of plan employees choose their own health insurance coverage, potentially from the Healthcare Marketplace. Because their employer receives a tax deduction for these plans, their employees in turn get a tax-free reimbursement.
The employee is initially responsible for the monthly premium and medical expenses related to the plan. Then after submitting the required information to their employer, they will receive set reimbursements.
To report the ICHRA on the Form 1095-C, employers will need to familiarize themselves with a new series of 1095-C codes, 1L-1S, to be reported on Line 14. Additionally, Line 17, is where employers must report their employees’ zip code and their “age as of January 1, 2020”. This information is important in calculating the affordability of the ICHRA plan.
Another significant change to the reporting requirements was the extension of the ACA Form 1095 recipient copy deadline. The IRS is now allowing employers until March 2, 2021 to distribute 1095 copies to their employees.
Since Congress voted to eliminate the Federal Individual Mandate, and effectively did so beginning in tax year 2019, many states have adopted state individual mandates. Now, Applicable Large Employers must meet ACA reporting requirements with both the IRS and their state agency.
To alleviate the additional stress of state mandate ACA Reporting, ACAwise supports filing with California, the District of Columbia, Massachusetts, New Jersey, and Rhode Island.
There are a few other states that have begun the process of setting up individual mandates, including Vermont, Washington, Minnesota, Maryland, Hawaii, and Connecticut. ACAwise will continue to add to these state filing solutions as clear requirements for each of these states become available.
When questioned about the changes to ACA reporting requirements for the upcoming year, ACAwise Co-founder and CEO, Agie Sundaram stated, “ACA reporting is a daunting task for employers, especially with the constant changes to the requirements. At ACAwise we aim to simplify the process and track changes in the ACA so that our clients don’t have to”.