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ACA Reporting Deadlines and Compliance Requirements in 2023

Question: What are the ACA reporting deadlines at the beginning of 2023 to report on the 2022 calendar year?

Short Answer: The IRS recently finalized new regulations providing that ALEs must furnish the Forms 1095-C to employees no later than March 2, 2023.  ALEs must file the Form 1094-C, as well as copies of the Forms 1095-C, with the IRS no later than March 31, 2023 if filing electronically.  If filing by paper, which is permitted only for employers who must file fewer than 250 returns, ALEs must file no later than February 28, 2023.

ACA Reporting: Overview

The ACA requires Applicable Large Employers (ALEs) to report whether they offered minimum essential coverage (MEC) that was affordable and provided minimum value to full-time employees.  Employers of any size with self-insured plans also report months of coverage for all enrolled individuals.  Regardless of funding arrangement, ACA reporting for ALEs is handled via IRS Forms 1094-C and 1095-C.

For more details:

 

ACA Reporting Deadlines for ALEs

The IRS recently finalized new ACA reporting regulations that make permanent the 30-day automatic extension from January 31 that was offered in prior years for employers to furnish the Form 1095-C to individuals. 

The IRS also made the extension available last year for the 2022 season of ACA reporting, even though the regulations were only in proposed form at that point.  The new final regulations ensure that the automatic 30-day extension will again be available for this year’s ACA reporting at the start of 2023—as well as all future years of ACA reporting.

The ACA reporting deadlines for ALEs will now be as follows:

  • Form 1095-C: Deadline to Furnish to Individuals
    Standard Due Date: January 31
    Automatically Extended Due Date: March 2
    (Leap Year Due Date: March 1)
  • Form 1094-C (+Copies of Form 1095-C):
    Deadline to File with IRS by Paper
    Standard Due Date: February 28
  • Form 1094-C (+Copies of Form 1095-C):
    Deadline to File with IRS Electronically (Required for 250 or More Returns)
    Standard Due Date: March 31

If the due date falls on a weekend or a legal holiday, the deadline is extended to the next business day.  These deadlines apply to all ALEs regardless of their plan year.

The IRS has also proposed regulations that would reduce the required electronic filing threshold to employers filing just 10 or more returns.  That reduced 10-return electronic filing threshold has not been finalized and therefore is not currently being enforced.

 

ACA Reporting: Fully Insured vs. Self-Insured Plans

The specific ACA reporting requirements vary depending on whether the employer is an ALE and whether the medical plan it sponsors is fully insured or self-insured.  Note that so-called “level funded” plans are treated as self-insured for these purposes because they are not fully insured.

ALEs sponsoring fully insured medical plans are not subject to the §6055 reporting in Part III of the Form 1095-C.  Their only reporting responsibility is under §6056, which is limited to Parts I and II of the Form 1095-C (as well as the full Form 1094-C).  Enrolled employees and their dependents’ coverage information for a fully insured plan are instead reported by the insurance carrier on the Form 1095-B.  The insurance carrier is solely responsible for furnishing and filing the Form 1095-B coverage information reporting for a fully insured plan, as well as soliciting any missing dependent SSNs.

ALEs sponsored self-insured medical plans are subject to §6055 reporting and therefore must complete Part III (in addition to Parts I and II) of the Form 1095-C.

The following overview addresses ACA reporting obligations by employer size and funding arrangement:

ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)
IRC §6055 and §6056 Reporting

  • Completed via Forms 1094-C and 1095-C.
  • Employer must complete Part III of the Form 1095-C (“Covered Individuals”) for enrolled individuals.
  • If the employer sponsors both self-insured and fully insured medical plan options, the employer completes Part III only for individuals enrolled in the self-insured medical plan.
  • Important Note: “Level funded” plans are considered self-insured for these purposes.

ALE Sponsoring a Fully Inured Medical Plan
IRC §6056 Reporting Only

  • Completed via Forms 1094-C and 1095-C.
  • Employer does not complete Part III of the Form 1095-C (“Covered Individuals”).
  • Insurance carrier completes coverage information on separate Form 1095-B.

Non-ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)
IRC §6055 Reporting Only

  • Completed via Forms 1094-B and 1095-B.
  • Employer does not complete Forms 1094-C and 1095-C (because not subject to the employer mandate).
  • Employer information listed in Part III (“Issuer or Other Coverage Provider”) of the 1095-B.
  • Employer does not complete Part II (“Information About Certain Employer-Sponsored Coverage”) of the Form 1095-B.
  • Important Note: “Level funded” plans are considered self-insured for these purposes.

Non-ALE Sponsoring a Fully Insured Medical Plan

  • No ACA Reporting!

 For more details:

 

ACA Reporting: Controlled Groups

Where an ALE subject to the ACA employer mandate has multiple corporate entities in a controlled group (an Aggregated ALE Group), each subsidiary or related entity in the controlled group must file a separate Form 1094-C.  Each entity (EIN) is referred to as an Applicable Large Employer Member (ALEM) for these purposes.

Aggregated ALE Groups will have additional ACA reporting obligations as follows:

The Form 1094-C for each ALEM will contain the following:

  • Part II, Line 21: Each ALEM will answer “Yes” to question “Is ALE Member a member of an Aggregated ALE Group?
  • Part III, Column (d): For each month in which the controlled group existed, this “Aggregated Group Indicator” box will be checked.
  • Part IV: This “Other ALE Members of Aggregated ALE Group” section will be completed listing the names of the other related entities in the controlled group (the other ALEMs) and their EINs.

The Forms 1095-C from each ALEM will contain the following:

The full-time employees of each EIN (i.e., each ALEM) must receive a Form 1095-C with that ALEM’s corporate name and EIN.  The employer cannot simply use the parent EIN for all Forms 1095-C in an Aggregated ALE Group.

Note: If an employee works for more than one ALEM in the Aggregated ALE Group in any calendar month, the ALEM for whom the employee worked the most hours of service in that calendar month is responsible for the employee’s Form 1095-C ACA reporting for that month.

For more details:

 

ACA Reporting: Additional Rules for COBRA

The only additional COBRA-related ACA reporting requirements for employers with a fully insured plan apply for situations where the employee’s qualifying event is a loss of coverage caused by reduction in hours (e.g., full-time to part-time).  The appropriate coding in that situation will depend on whether the employee elects COBRA and whether the employee was in employee-only or family coverage.

In addition to the ACA reporting related to COBRA that fully insured plans must address with reduction-in-hours qualifying events, self-insured plans (including level funded plans) must also report the coverage information completed in Part III for all months of active or COBRA coverage.

Part II of the Form 1095-C for COBRA participants who were a full-time employee for at least one month in the year will be completed in the same manner for both a self-insured and fully insured plan.  For individuals whose active coverage terminated in a prior year but were enrolled in COBRA under a self-insured plan for at least one month in the reporting year, the Part II coding will reflect that the individual was not an employee for any month of the year (Code “1G” in Line 14 for all 12 months).

Note: Additional special coverage reporting rules apply where the spouse or dependent elect COBRA separately from the employee.

For more details:

 

ACA Reporting: Furnishing Relief for Insurance Carriers

In light of the TCJA effective repeal of the ACA individual mandate by reducing the penalties to zero as of 2019, the IRS has provided relief to insurance carriers in recent reporting years (referred to as §6055 furnishing relief”) that does not require them to furnish the Form 1095-B to covered individuals. 

The relief provides that the IRS will not assess penalties for an insurance carrier’s failure to furnish Forms 1095-B to individuals under two conditions:

1)    The insurance carrier posts a notice prominently on its website stating that individuals may receive a copy of their Form 1095-B upon request (with relevant contact information); and

2)    The insurance carrier must furnish the Form 1095-B to any individual upon request within 30 days of the date it receives the request.

This relief with respect to insurance carriers furnishing coverage information to individuals on the Form 1095-B does not apply to ALEs reporting on the Form 1095-C.  The ACA employer mandate remains fully in effect, and therefore so do the employer ACA reporting requirements via Form 1095-C.  ALEs sponsoring a self-insured medical plan are still required to complete Part III of the Forms 1095-C for individuals enrolled in that plan (even though that information is related to the same §6055 reporting requirements) and furnish the Forms 1095-C automatically to those individuals.

Note: Non-ALEs sponsoring a self-insured health plan (e.g., level funded employers under 50 full-time employees) can take advantage of this §6055 furnishing relief.  However, as with insurance carriers, they are still required to file the Forms 1094-B and 1095-B with the IRS.

 

ACA Reporting: Streamlined Reporting Options

ALEs meeting the federal poverty line affordability safe harbor may utilize the Qualifying Offer Method, provided the offer of coverage was also made available to the employee’s spouse and dependents, if any.  The federal poverty line affordability safe harbor applies where the lowest possible employee contribution for the major medical plan in 2022 did not exceed $103.14. 

Note: The federal poverty line affordability safe harbor increases slightly to $103.28 for offers of coverage in 2023).

For more details:

Under the Qualifying Offer Method, the employer does not complete Line 15 (the employee required contribution) of the full-time employee’s Form 1095-C, and entering a code on Line 16 is optional because by definition a “qualifying offer” is affordable and therefore no potential employer mandate penalty could apply.  This streamlined reporting option is available because the monthly employee-share of the premium for the lowest-cost plan at the employee-only tier is not relevant for B Penalty purposes where coverage is deemed affordable for all employees under the federal poverty line affordability safe harbor.

The employer must check the “Qualifying Offer Method” box in Line 22 (Box A) of the Form 1094-C to take advantage of this approach.  For full-time employees who are offered coverage, the employer will list Code “1A” (qualifying offer) in Line 14 of the full-time employee’s Form 1095-C. 

There is also streamlined reporting available through the 98% Offer Method.  This slightly streamlined reporting is generally available where the employer offers MEC that provides MV to at least 98% of its full-time employees.  Employers utilizing this method do not have to complete the monthly full-time employee count section (Part III, column (b)) of the Form 1094-C.

For more details:

 

ACA Reporting: Dependent SSN Solicitation Process for Self-Insured Plans

For ALEs sponsoring a self-insured plan, Part III includes an SSN entry field for the employee and each covered dependent.  However, there is no requirement that the employee provide each covered dependents’ SSN, nor is there any requirement that the employer obtain each covered dependents’ SSN from the employee.  What is required is that the employer act in a “responsible manner” to obtain each covered dependents’ SSN.   

To act in a “responsible manner,” the employer must make three attempts to solicit each covered dependents’ SSN from the employee:

1)    First Solicitation: Employer requests the SSN upon the employee’s election to enroll the dependent.  This is referred to as the “account opened” solicitation.

2)    Second Solicitation: Employer requests the SSN again within 75 days of the employee’s election to enroll the dependent.  This is referred to as the “first annual solicitation”.

3)    Third Solicitation: Employer requests the SSN a third time by December 31 of the year following the year the employee elected to enroll the dependent.  This is referred to as the “second annual solicitation”.

If the employee fails to provide the dependent’s SSN after all three attempts, there is no requirement to continue to solicit the SSN. At this point (as well as during the solicitation process) the employer will enter the dependent’s date of birth in Part III, column (c) of the Form 1095-C (instead of the SSN in column (b)).

 For more details:

 

ACA Reporting Failures: Standard Penalties

The general potential late/incorrect ACA reporting penalties for forms required to be furnished/filed in 2023 are $290 for the late/incorrect Forms 1095-C furnished to employees, and $290 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS. 

That comes to a total potential general ACA reporting penalty of $580 per employee when factoring in both the late/incorrect Form 1095-C furnished to the employee and the late/incorrect copy of that Form 1095-C filed with the IRS.  The 2023 maximum penalty for a calendar year will not exceed $3,532,500 for late/incorrect furnishing or filing. 

Note: The employer is subject to a penalty of at least $580 per form—with no maximum penalty—if the IRS finds that it intentionally disregarded the filing or furnishing of the correct Forms 1094-C and 1095-C in 2023.

 For more details:

 

ACA Reporting Failures: Reduced Penalties

The IRS reduces that general penalty if the late/corrected forms are furnished/filed in certain time periods:

  • 30-Day Correction: If corrected within 30 days of the due date, the per-return penalty is $50 (capped at $588,500 in 2023).
  • August 1 Correction: If corrected by August 1, the per-return penalty is $110 (capped at $1,766,000 in 2023).

There is also “reasonable cause” relief available that could potentially reduce or eliminate these ACA reporting penalties if the employer can show no willful neglect, that it acted in a responsible manner both before and after the failure occurred, and there were significant mitigating factors or events beyond its control.  Those requirements are set forth in Treas. Reg. §301.6724-1.  IRS Publication 1586 includes a useful summary of the conditions to qualify for reasonable cause relief.

Note that prior to the 2022 ACA reporting season, the IRS offered a good faith effort penalty relief for incorrect or incomplete information on the ACA reporting forms.  This good faith standard no longer applies.

 For more details:

 

ACA Reporting Corrections: Form 1094-C

Employers that timely correct ACA reporting errors can significantly reduce their potential penalty liability, as described above. 

The Form 1094-C transmittal sheet is generally filed only once as an “Authoritative Transmittal” for each entity within the ALE.  It can be corrected as follows:

Authoritative Transmittal: Correction Process

For corrections of Authoritative Transmittals, the IRS directs employers to:

  • File a standalone, fully completed Form 1094-C with the corrected information included; 
  • Enter an “X” in the “CORRECTED” checkbox at the very top of the Form 1094-C; and
  • Submit the standalone corrected Form 1094-C Authoritative Transmittal with the correct information included. 

Employers do not file Forms 1095-C or any other documents with the corrected Authoritative Transmittal Form 1094-C.

 For more details:

 

ACA Reporting Corrections: Form 1095-C

Employers that timely correct ACA reporting errors can significantly reduce their potential penalty liability, as described above. 

The Form 1095-C is both furnished to the employee and filed with the IRS.  The correction process for Forms 1095-C depends on whether the forms have only been only furnished to the employee, or if the forms have been furnished to the employee and also filed with the IRS.

Forms 1095-C Not Filed with the IRS

Correcting Forms 1095-C that were not filed with the IRS requires only re-furnishing the corrected Form 1095-C to the employee.  In this case, employers do not enter an “X” in the “CORRECTED” checkbox.

Employers will instead write, type, or print “CORRECTED” on the new Form 1095-C furnished to the employee.

Forms 1095-C Filed with the IRS

In this situation, the employer will need to re-furnish the corrected Form 1095-C to the employee and re-file it with the IRS.

The correction process is as follows:

  • Fully complete a corrected Form 1095-C with the error(s) fixed;
  • Enter an “X” in the “CORRECTED” checkbox on the Form 1095-C;
  • Submit to the IRS the corrected Forms 1095-C with a nonauthoritative Form 1094-C transmittal;
  • Do not mark the “CORRECTED” checkbox on the Form 1094-C filed with the corrected Forms 1095-C; and
  • Furnish a copy of the corrected Form 1095-C to the employee. 

Note: Employers using the Alternative Furnishing Method (very uncommon) must follow slightly different correction procedures outlined in the Form 1095-C Instructions.

 For more details:

 

State-Based Individual Mandate Reporting

The TCJA effectively repealed the ACA individual mandate by reducing the penalties to zero as of 2019.  As a result, the §6055 coverage information gathered in Part III of the Form 1095-C for a self-insured plan no longer has a clear federal reporting purpose.  

Nonetheless, several states have recently added their own state-based individual mandates in response to the effective repeal of the ACA federal individual mandate.  Such states include California, Massachusetts, New Jersey, Rhode Island, and Washington D.C.  Other than Massachusetts, these states typically rely on the §6055 reporting information by piggybacking off Part III of the Form 1095-C (provided to the state by the employer for self-insured plans) or Form 1095-B (provided to the state by the carrier for fully insured plans) to gather coverage information for residents.

If the §6055 reporting requirements are ever eliminated in response to the now defunct ACA individual mandate, such states would have to devise their own state-based individual mandate reporting forms.  Those could be modelled after the Massachusetts Form 1099-HC that has been used since the state first imposed its individual mandate well in advance of the ACA.

  

Relevant Cites:

New Final ACA Reporting Regulations:

§1.6055-1 Information reporting for minimum essential coverage.

(4) Time and manner for furnishing statements--(i) Time for furnishing. Except as otherwise provided in this paragraph (g)(4)(i), a reporting entity must furnish the statements required under paragraph (g)(1) of this section on or before January 31 of the year following the calendar year in which the minimum essential coverage is provided. Reporting entities are granted an automatic, 30-day extension of time in which to furnish these statements.

§301.6056-1 Rules relating to reporting by applicable large employers on health insurance coverage offered under employer-sponsored plans.

(1) Time for furnishing. Except as otherwise provided in this paragraph (g)(1), each statement required by this section for a calendar year must be furnished to a fulltime employee on or before January 31 of the year succeeding the calendar year in accordance with applicable Internal Revenue Service procedures and instructions. Applicable large employers are granted an automatic, 30-day extension of time in which to furnish these statements.


Brian Gilmore

About the author

Brian Gilmore

Lead Benefits Counsel

Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law. Connect with Brian on LinkedIn.


The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.

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