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IRS and ACA Compliance

Beginning in 2015 employers will need to report to the IRS to ensure ACA compliance. Forms 1094-C and 1095-C will be used by employers with 50 or more full-time employees or full-time equivalents to determine whether they are liable for penalties under the employer shared responsibility requirements of the ACA. These forms will also be used to determine whether employees have received an affordable and adequate offer of coverage, rendering them ineligible for premium tax credits. Employers are required to provide each full-time employee with a form 1095-C and to file each of these together with a transmittal form 1095-B with the IRS. (Society for Human Resource Management/

This reporting requirement has a triple purpose, as it is designed to allow the IRS to enforce the employer mandate, enforce the individual mandate, and confirm eligibility for premium tax credits for coverage purchased through an Exchange.

This reporting and disclosure requirement is new for employers and may catch some employers off-guard.  For example, the reporting requires collection and disclosure of information including, but not limited to, the following:

  • Social Security numbers of employees, spouses and dependents;
  • Names and EINs of other employers within the employer’s controlled group of corporations for each month of the calendar year;
  • Number of full-time employees for each calendar month;
  • Total number of employees (full-time equivalents) for each calendar month;
  • Section 4980H transition relief indicators for each calendar month;
  • Employee’s share of the lowest-cost monthly premium for self-only, minimum value coverage for each calendar month; and
  • Applicable Section 4980H safe harbor for each calendar month.

In light of the complexity of the new information reporting requirements, employers should take the following actions, advised McGladrey LLP:

  • Learn about the new information reporting requirements and review the draft IRS forms.
  • Develop procedures for determining and documenting each employee’s full-time or part-time status by month.
  • Develop procedures to collect information about offers of health coverage and health plan enrollment by month.
  • Review ownership structures of related companies and engage professionals to perform a controlled/affiliated service group analysis.
  • Discuss the reporting requirements with the health plan’s insurer/third-party administrator and the company’s payroll vendor to determine responsibility for data collection and form preparation.
  • Ensure that systems are in place by Dec. 31, 2014 to collect the needed data for the reports.

If you have questions about the ACA and IRS compliance, your Essential Personnel consultant is here to help. We can also payroll employees to lessen your administrative burden and reduce your risk of non-compliance.

Sources: Society for Human Resource Management/, McGladrey LLP/