Figuring out ACA reporting can feel like navigating a maze blindfolded. With code words like “1094s,” “1095s,” and talk of "offers of coverage," it's no wonder employers feel lost.
Picture this: Your business is thriving, your employees are satisfied and working hard, and you’re taking the steps you need to provide your employees with the best possible benefits. Still, something is constantly pricking the back of your mind: ACA reporting requirements.
We get it. Staying on top of changing regulations is tough, but non-compliance can lead to IRS audits, penalties, and fees.
This article translates the often confusing ins and outs of ACA reporting. We'll cover the basics of what it entails, walk through the required annual reports like Forms 1094-C and 1095-C, and provide five pro tips to help larger employers follow ACA requirements and avoid potential headaches.
ACA Reporting Requirements for Employers with 50+ Employees: An Overview
Now that we've oriented ourselves to the maze of ACA reporting, let's go over some basics of what it entails.
At its core, ACA reporting represents two types of annual information returns that employers must file with the IRS and let employees know they did it.
If you don’t properly file these reports or make mistakes on your employees’ statements, you might have to pay expensive penalty fees. We're talking up to $280 per form! This can rapidly scale into the tens or hundreds of thousands, depending on the size of your team.
The good news is that the right payroll service provider can help employers like you seamlessly handle ACA reporting. Their expertise and automation take the burden off your shoulders, making sure filings are completed accurately and on time.
ACA Reporting Compliance Basics
Though ACA reporting compliance is essential, not all employers are subject to its requirements.
Only applicable large employers (ALEs) with 50 or more full-time employees (including full-time equivalents like contractors) must worry about filing these annual returns. An employer's ALE status is determined separately for each calendar year based on team size.
Here are the ACA reporting requirements for employers with 50+ if you do fall into that ALE bracket:
Section 6055 Returns
The section 6055 return report gives the IRS the specifics on what health coverage (if any) you offered to each of your full-time employees. You must share details on employees and their dependents enrolled in self-insured company health plans during the past year. This confirms who had coverage and what kind.
If you use paper returns, file them by February 28. If you’re filing electronically, you have until March 31.
Section 6056 Returns
This second form details the number of full-time employees and their health plans, including affordability and participant costs, by month. 6056 returns follow the same timelines as 6055: they also must be submitted by February 28 or March 31 (depending on paper or electronic filing).
These forms are similar in title and what they require, making it easy to get them mixed up. But don’t! Make sure you properly track employee data to fill out these forms inaccurately and avoid the IRS’ misfiled return fee.
Pro Tip: have new employees choose their healthcare options along with other HR forms during onboarding and revisit their options for the next year in early December (at the latest). This lets you be confident you have accurate, up-to-date information for filing.
ACA Reporting Required Reports
The IRS requires all ACA returns to be filed electronically through their ACA Information Returns (AIR) system. This online portal efficiently collects and processes your required health coverage data. AIR-approved software helps by automatically pulling needed information like full-time headcounts, affordability details, and more. It packages the data into standardized formats the IRS AIR system can quickly accept.
As an employer, you have three options to leverage AIR compatibility. You can use the IRS's free AIR online filing, a commercial ACA reporting software, or integrate filing through a payroll provider's built-in tracking tools.
Even with software, some still file paper returns using Form 1094-C (the summary cover page form showing overview numbers) and 1095-C (details on details individual coverage offerings per employee). No matter how you submit, ensuring accurate yearly reporting lets you provide quality benefits without the risk of getting fined.
5 Filing Tips for ACA Required Reports
Use your payroll system and HRIS data to track info needed
Leveraging the personnel and benefits enrollment data already in your payroll system helps you do accurate, efficient ACA reporting. This practice also reduces manual data collection and saves administrative time while avoiding inaccuracies that lead to penalties. Look into details like how many hours employees worked, their health plan eligibility, and actual coverage by month. You can also set up a custom report to get required figures like monthly full-time employee headcounts.
Work with benefits advisor/broker
Your benefits broker or advisor lives and breathes ACA compliance needs. Leaning on their up-to-date knowledge helps guarantee you properly complete forms. The best way to get ahead is to schedule a consultation three to four months before filing deadlines. This way, you’ll understand ACA reporting requirements for employers with 50+ employees and can start compiling the right data points in advance.
Start collecting data early
Don't push off digging into the reporting — delays lead to mistakes, which equals fines!
Instead, choose an internal point person to spearhead data collection and capture relevant team information starting January 1st of the applicable year. Then, review their progress monthly. This way, you can catch any missing pieces with enough time to correct your course.
Confirm accuracy before filing
Verify figures, employee counts, coverage affordability measurements, and other calculations with a fine-tooth comb to check the box for accuracy. Have your preparer and an uninvolved peer double-check your documents before submitting them to catch any last-minute errors, giving you one final chance to correct them.
Lastly, while paper filing remains an option, submitting returns digitally through the AIR system reduces mistakes and speeds up IRS processing. Plus, you get confirmation that the instant filing is accepted. Filing electronically also makes it easy to keep digital returns and promptly get furnished statements to your team after approval.
Let Your Payroll Partner Help With ACA Reporting Requirements for Employers with 50+
ACA reporting requirements for employers with 50+ employees can feel burdensome and complex. Doing this right is important, especially when you add the granular data required on both the employer and employee level and the penalties mistakes can trigger.
If you’re an ALE subject to ACA rules, you must understand reporting requirements and get support to compile, verify, and submit returns accurately and on time. The right payroll service partner provides that guidance and simplifies the entire process.ConnectPay offers a full-service payroll solution and can connect you with local experts in taxes, compliance, Workers' Comp, and more. We’ll ensure you have the insights, automation, and assistance you need to confidently run payroll and stay on top of critical reporting like ACA mandates. Schedule your free Payroll Tax and Compliance Review to learn more.