ACA form

Following a judge’s ruling in Texas that the individual mandate is unconstitutional, some employers are under the mistaken impression that they no longer need to worry about ACA forms and penalties. Not true! Applicable large employers (ALEs) must still meet their reporting obligations under the ACA employer mandate.

Here’s the latest:

  • A federal judge in Texas ruled that the Affordable Care Act’s individual coverage mandate was unconstitutional and therefore the entire law is invalid. The ruling is certain to be appealed, and while this plays out the ACA will remain in effect and all reporting requirements are still in place.
  • The ACA’s individual mandate penalty is STILL IN PLACE for 2018. After 2018, although the individual mandate will remain in effect, the tax penalty will be eliminated.
  • The deadline for distributing Form 1095-C for the 2018 tax year has been extended to March 4, 2019 (from January 31, 2019). The new deadline also applies for distributing Form 1095-B, used by employers with self-funded insurance programs.
  • There is no change regarding the filing deadlines for filing the information return and transmittal Form 1094-C (February 28 if filing on paper, April 1 if filing electronically).
  • The IRS has increased the penalties for employers that do not comply with the ACA (including the filing of ACA forms) for the 2018 tax year:
    • The 4980(a) penalty for failure to offer minimum essential coverage will increase from $2,260 per employee in 2017 to $2,320 per employee in 2018.
    • The 4980(b) penalty for failure to offer coverage that meets affordability and minimum value will increase from $3,390 per employee in 2017 to $3,480 per employee in 2018.
    • The failure to file penalty for employers who do not file correct information returns for 2018 increased from $260 per return in 2017 to $270 per return in 2018.
    • The failure to furnish penalty for employers who fail to provide correct 1095-C payee statements to employees increased from $260 per return in 2017 to $270 per return in 2018.
  • Good faith transition relief has been granted by the IRS for the 2018 tax year from sections 6721 and 6722 penalties. However, the relief can only be applied when it is demonstrated that reasonable efforts have been made to comply with the ACA regulations and IRS deadlines in a responsible manner.

As stated earlier, the ruling from the Texas judge is expected to be appealed. Until that situation is resolved, however, you should continue to distribute and submit the necessary ACA forms and other paperwork to ensure compliance. If you have questions or concerns about any aspect of the ACA, contact the HR Solutions team at James Moore.

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