The Internal Revenue Service (IRS) has released the final 2023 forms and instructions for Affordable Care Act (ACA) reporting. This guide provides detailed information to assist employers in completing their ACA reporting for the 2023 calendar year effectively.
Key Changes and Requirements
New Electronic Filing Requirements for 2024: It’s important to note the new electronic filing requirements coming into effect in 2024. This change will impact the way employers submit their ACA reporting forms.
ACA Reporting Requirements for 2023
Minimum Essential Coverage (MEC) Reporting
Under Internal Revenue Code §6055, sponsors of self-funded health plans and health insurance carriers are required to provide information on MEC. This is used for individual mandate compliance as per state law.
Applicable Large Employer (ALE) Reporting
ALEs, defined as employers with at least 50 full-time employees, including full-time equivalent employees (FTEs), must report on offers of health coverage. The coverage should be affordable and provide minimum value.
- Affordable Coverage: For plan years starting January 1, 2024, the IRS has set the affordability percentage at 39%.
- Minimum Value Coverage: The plan must cover at least 60% of total allowed costs and provide substantial coverage of inpatient hospital and physician services.
Reporting is crucial for employer mandate compliance and individual premium tax credit eligibility.
This table summaries ACA reporting requirements based on employer and plan type:
| Employer & Plan Type | Reporting Entity | IRS Transmittal Form | IRS Return | Employee Statement |
|---|---|---|---|---|
| ALE with fully insured group health plan | Health Insurance Carrier | Form 1094-B | Form 1095-B | Form 1095-B |
| ALE with fully insured group health plan | Employer | Form 1094-C | Form 1095-C | Form 1095-C (or alternative method) |
| ALE with self-funded group health plan | Employer | Form 1094-C | Form 1095-C | Form 1095-C (or alternative method) |
| Non-ALE with fully group insured health plan | Health insurance carrier | Form 1094-B | Form 1095-B | Form 1095-B |
| Non-ALE with self-funded/level-funded group health plan | Employer | Form 1094-B | Form 1095-B | Form 1095-B |
ACA Reporting Forms Overview
Forms 1094-C and 1095-C (“C” Forms)
These forms are used by ALEs to report coverage offers to full-time employees and by self-funded ALEs to report MEC.
Forms 1094-B and 1095-B (“B” Forms)
These forms are used by health insurance carriers and small employers with self-funded/level-funded health plans to report on individuals who had MEC.
Deadlines and Electronic Filing Changes
The deadline for distributing forms to employees and other individuals is March 1, 2024. ACA Reporting to the IRS (electronic filing) must be completed by April 1, 2024. Notably, for 2024, the threshold for mandatory electronic filing has been reduced from 250 to just 10 forms.
This table summarizes 2024 ACA reporting deadlines for all ALEs, regardless of plan year:
| Deadline | ACA Reporting Item | Employer Actions |
|---|---|---|
| March 1, 2024* | Forms sent to employees/other individuals (e.g., part-time employees, retirees, COBRA enrollees) | ALEs and non-ALEs who offer self-funded/level-funded plans must distribute Forms 1095 to employees by March 1, 2024. |
| April 1, 2024** | ACA Reporting to IRS (electronic filing) | ALEs and non-ALEs who offer self-funded/level-funded plans must submit Forms 1095 and 1094 to the IRS by April 1, 2024. |
* The usual 30-day extended deadline falls on March 2 each year. However, for the 2023 calendar year, the deadline is set for March 1, 2024, due to 2024 being a leap year.
** Typically, the deadline is March 31 each year. However, for the 2023 calendar year, it has been moved to Monday, April 1, 2024, because March 31, 2024, falls on a Sunday.
Alternative Method for ACA Reporting
The IRS permits certain reporting entities to use an alternative method for furnishing forms to specific plan participants, such as part-time employees and non-employees.
ACA Reporting Penalties
Employers should be aware of the penalties for incomplete or incorrect forms, which can be substantial. The penalty for failing to file electronically is also increasing to $310 per return (previously $290), with a maximum of $3,783,000 (previously $3,532,500) for filers with more than ten returns.
State Filing Requirements
Several states and local jurisdictions have individual health insurance mandates with specific deadlines for providing forms to employee residents and filing forms with state/local tax agencies. These include:
- California
- Massachusetts
- New Jersey
- Rhode Island
- Washington, D.C.
| State | Deadline to Provide Forms to Employee Residents | Deadline to File Forms with State/Local Tax Agency |
|---|---|---|
| California | January 31, 2024 | April 1, 2024 (no penalties assessed if filed by May 31, 2024) |
| Massachusetts | January 31, 2024 | April 1, 2024 |
| New Jersey | March 1, 2024 | April 1, 2024 |
| Rhode Island | March 1, 2024 | April 1, 2024 |
| Vermont | N/A | N/A (no current reporting requirement) |
| Washington, D.C. | March 1, 2024 | May 1, 2024 (30 days after federal deadline) |
