It’s Time For Your 2021 ACA Reporting With ACAwise!
Finally, we have thrown out the 2020 pandemic year behind us and entered into the new year!
This means, it’s time for your 2021 ACA reporting and stay compliant with the IRS this year without any penalties.
We understand ACA reporting is crucial, and at the same time, a daunting task for employers each year. However,
it’s time to warm up and get started!
Reading this article gives necessary information and updates for employers who are mandated to file
IRS forms 1094 and 1095 for the tax year 2020.
Changes to ACA reporting in 2021
Below are some changes introduced to the 2021 ACA reporting, which employers must know to
avoid unwanted IRS penalties.
Extension of Deadline
One of the significant changes in the 2021 ACA Reporting is the deadline. The IRS has extended the deadline
to distribute the ACA Forms 1095-B / 1095-C employees copies from January 31, 2021, to March 02, 2021.
Mandated ICHRA Reporting
For the 2021 ACA reporting, IRS mandates the reporting of ICHRA on Form 1095-C to the employers who
offered ICHRA ( Individual Coverage Health Reimbursement Arrangements) for their employees from January 1, 2020.
With an ICHRA, employees can purchase the health care services they need, including individual health insurance,
and submit the proof to their employers. The employers will then review and reimburse for valid claims with an
allowance of tax-free money. There are no minimum or maximum reimbursement limits that an employer can offer.
When reporting the ICHRA plan on Form 1095-C, you must be aware of the new code series (1L-1S) to be reported on
Line 14. There is also an addition of Line 17 on Form 1095-C, in which you must report the employees’ zip code
that you used for calculating the affordability of the ICHRA plan. You should also indicate your employees’ age as of
January 1, 2020, in part-II of Form 1095-C.
Are you wondering how these changes would impact your 2021 ACA reporting? Feel free to reach out to the team of
Build your ACA reporting data
The key to error-free ACA reporting to the IRS is to maintain accurate employee records. If you use a payroll provider,
you should reach out to them for this information.
If you provide a fully-insured group health insurance plan to your employees, your insurance carrier should provide your
employees with copies of Form 1095-B. If they do not, you are responsible for reaching out to them and fulfilling this
obligation to avoid unwanted penalties from the IRS.
Validate your form data
It’s essential to validate the employee’s data to avoid common errors that lead to your ACA Forms’ rejection.
For example,
submitting the forms with an incorrect address, TIN with the IRS leads to huge penalties.
The best way to avoid these kinds of negligence errors is to send the data to the respective employees for confirmation.
Start generating the ACA Codes and Forms
Once you get confirmation and feel confident about your employee’s information is accurate and up to date. Now is the
time to begin generating your Forms 1094 and 1095 with ACA codes.
You are required to generate ACA codes on Lines 14 and 16 of Form 1095-C. The ACA codes you use on Line 14
provide information about the offer of coverage, and line 16 codes pertain to certain Safe Harbors you use to report to
the IRS.
However, before filing these 1095 forms electronically, they must be in the proper XML format to be transmitted to the
IRS.
If you lack knowledge in generating ACA Forms with ACA codes, you can look out for an IRS-authorized ACA reporting
vendor. They will handle the generation of your forms with required ACA codes based on the data you provide and
transmit them via the IRS AIR System.
State filing requirements
After Congress eliminated the individual federal mandate penalty under the Affordable Care Act (ACA), several states
have begun implementing the individual mandate at the state level.
So, if you employ residents from the below states, you must comply with the state individual mandate.
Meet ACA reporting requirements with the Right ACA reporting vendor
If you think ACA reporting is a mammoth task to tackle on your own, you can look out for an ACA reporting vendor
who can take the risk out of your 2021 ACA 1094 and 1095 Form Reporting with the IRS.
While choosing an ACA reporting vendor, it is very important to determine whether they meet the following checklists:
Are they an IRS-authorized E-file Provider?
Can they timely file your information returns with the IRS and states before the deadline?
Are they familiar with generating 1095 forms with accurate ACA codes from the information you provide?
Do they offer a solution for distributing the recipient copies?
Are you looking for an ACA reporting solution provider that meets the above checklist, check out ACAwise!
We offer flexible services that fit all your ACA reporting needs.
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