Affordable Care Act (ACA) reporting can be incredibly confusing and cumbersome. Because of this, many employers faced extreme penalties from the IRS because they, or the company they outsourced their ACA reporting to, were not prepared to handle the ACA reporting requirements. Read on to learn some common Affordable Care Act reporting mistakes from last year:
3 Affordable Care Act Reporting Mistakes
- Not properly reporting full month versus partial month offer/enrollment.
For Line 14 regarding offer of coverage, you should enter one of nine codes for each employee every month. This line cannot be left blank. You should use the “All 12 months” box if the code and coverage is the same for all months. A Line 14 offer of health coverage means coverage for the entire month. An offer of coverage is considered to be made for a month only if health coverage is available for every day of that calendar month. If enrollment is offered mid-month, you should not report coverage as not being offered, even though the employee may not have been hired yet. If coverage terminates mid-month, you should not report coverage as being offered, even if the employee terminated employment that month. That said, the line 16 safe harbor codes could be used to indicate the reason why coverage was not offered every day.
- Improper reporting on Line 14.
The applicable large employer (ALE) member uses Line 14 in Part II of Form 1095-C to report whether an offer of coverage was made to an employee for each month of the year. For these purposes, the ALE member should enter the appropriate code to indicate what type of coverage, if any, was offered to the employee for that month, not the coverage actually elected by the employee. So, an employer should not report that an employee was only offered self-only coverage because that’s what he enrolled in, if in fact the employee had the opportunity to elect family coverage.
- Incorrect completion of Part III on Form 1095-C.
Only certain ALE members should complete Part III. An ALE member that offers coverage through an employer-sponsored fully-insured health plan (and does not sponsor a self-insured health plan) should NOT complete Part III. Instead, information about coverage will be furnished to employees on Form 1095-B, which is filed by the insurance provider.
Want more Affordable Care Act reporting mistakes? Download the infographic Top 10 ACA Reporting Mistakes to learn 7 more mistakes to avoid for next year’s ACA reporting.
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