Six years after the ACA, there is still a significant amount of confusion among brokers about the Affordable Care Act. Below are six of the most important things for anyone involved in ACA reporting and compliance to understand:
- The employer mandate is still in effect: Yes, the ACA employer mandate is still going strong. That means employers are legally required to continue to offer affordable benefits to their employees, as well as report those efforts to the federal government (and certain state governments) each year if they want to avoid penalties.
- Carriers do NOT perform ACA Reporting for Applicable Large Employers (ALEs): The insurance carriers DO NOT complete Form 1094/1095-C reporting, as they do not have the requisite information. Carriers do not know which employees have waived coverage (waivers still need a form). For fully-insured plans, the carriers DO produce a B form for those employees covered under the plan.
- No section can be left incomplete: One of the cardinal rules of ACA Reporting is to NEVER leave blanks -- especially on Line 16 (unless, of course, your organization did NOT fully satisfy the employer mandate). Leaving blanks tells the IRS that your organization did not do what you were supposed to (and legally obligated to do) under the law (i.e. offer affordable coverage).
- Make sure you check the right boxes: Make sure to review the 1094-C meticulously. For non-specialists, ACA forms can be complex and daunting, leading to errors and penalties. Far too often, we see that organizations have erroneously selected the wrong boxes on ACA reporting forms or using ACA Reporting software. For instance, did you really intend to indicate that your organization did NOT offer minimum essential coverage (MEC) for the year? That's quite unlikely - but it's a common error. Make sure to review all of the boxes selected and ensure that what you are submitting is accurate and complete.
- The "Do It Yourself" Approach is a REALLY BAD idea: Don't do it. Ever. Yes, this is the 6th year of ACA Reporting, but doing it yourself is still a gamble -- especially if you leave a section incomplete or forget to check the right boxes. Incomplete, incorrect or non-submitted reports can result in significant penalties that are difficult (if not impossible) to refute without meticulous documentation. The COVID-19 pandemic has only exacerbated this challenge for many employers, with significantly more complex and convoluted employee scenarios. The cost of engaging an ACA Reporting Expert (like MZQ Consulting) is often a small fraction of the potential penalties.
- You get what you pay for: Compliance can be expensive. But penalties for ACA reporting can (and do!) cost employers significantly more money. As former US Deputy Attorney General Paul McNulty said in a recent address, "If you think compliance is expensive, try non-compliance."
There you have it - six things brokers still need to understand about the ACA. If you have more questions about ACA reporting and compliance, please drop us a comment below and we'll do our best to answer it!