Navigating the Affordable Care Act (ACA) reporting requirements can be daunting for employers. Let’s talk about a few you can effectively tackle these challenges.

Why is ACA Reporting so Difficult?

No Statute of Limitations on Penalties

The IRS can impose penalties under sections 4980H (a) or (b) at any time, meaning employers must keep detailed records of payroll, insurance offerings, and other supporting documentation for each tax year indefinitely.

Form Errors and Penalties

Incorrect information on Forms 1094-C and 1095-C can result in IRS penalty letters, also known as "Love Letters" (Letter 226J). Some common errors include:

• Not offering coverage to 95% of full-time employees
• Offering coverage that doesn’t meet minimum value or affordability standards

And since “good faith” went away in tax year 2021, one penalty can be replaced with another.

Complex Data Management

Employers with large, decentralized operations often struggle with inconsistent data across multiple systems and locations, complicating the accurate reporting of employee information.

Steps for Effective ACA Compliance

1. Respond Quickly to IRS Letters: Review and correct any errors immediately to avoid further penalties.
2. Complete Back Filings: Ensure all required forms for each tax year are filed correctly. Address missing filings promptly to prevent penalties.
3. Request Forgiveness for Filing Failures: If an employer fails to file, they must demonstrate "Reasonable Cause" to the IRS by proving significant mitigating factors or that the failure was beyond their control.
4. Seek Professional Help: Use services like Medcom to handle complex backfilings and interactions with the IRS.
5. Maintain Accurate Records: Keep detailed and consistent records across all systems.
6. Regular Compliance Checks: Brokers should regularly check the reporting status for all clients and address any issues promptly.
7. Plan for Future Compliance: Implement a plan to avoid future challenges and ensure ongoing compliance.

ACA reporting is challenging, but with the right approach, employers can minimize risks and avoid penalties. By maintaining accurate records and responding promptly to the IRS, along with a little expert guidance from Medcom, employers can take the first step in the right direction to ACA compliance.

For tailored solutions and detailed assistance from ACA specialists, please don’t hesitate to contact us. We offer comprehensive services, including ACA employer reporting, FTE benefit eligibility tracking, back filings, and penalty appeal support, to help you stay compliant and reduce reporting burdens. Medcom is consistently recognized as a top vendor for ACA Tracking and Reporting by Shortlister.