The Affordable Care Act forms are also known as Forms 1094 and 1095 – let’s get to know them a little bit better.
ACA Forms: What They Are & What They Do
The Affordable Care Act (where the ACA forms get their name) is a healthcare reform law that was passed in 2010. Its purpose is to increase healthcare insurance coverage for uninsured individuals while reforming the healthcare marketplace to make affordable healthcare easily accessible to all people.
Though it has been the subject of much criticism, the ACA is still intact, and so are the information return forms used to ensure that all employers are staying compliant with the ACA requirements.
The ACA Forms are where businesses and individuals organize and report their contributions to the healthcare costs of employees. The ACA established guidelines for minimum essential coverage, or MEC, which include:
- Government sponsored programs
- Employer-sponsored coverage
- Individual market coverage
- Grandfathered plans
- Other health benefits and coverage recognized by the Department of Health and Human Services as minimum essential coverage
There are several ACA forms: 1095-A, 1094-B, 1094-C, 1095-B, and 1095-C. Let’s discuss what each form consists of and who is responsible for filling out and submitting it.
ACA Forms: 1095-A
The Form 1095-A comes from the insurance companies that are participating in ACA healthcare exchanges with businesses and individuals. The insurance company sends this to you (the employer) so that your business can facilitate the filing of the other 1095 and 1094 ACA forms.
ACA Forms: 1095-B & 1094-B
The B and C versions of these ACA forms are grouped together when submitted. The first of these is the B version, which focuses on health coverage.
The 1095-B is issued by self-insured employers that have fewer than 50 full-time or equivalent employees and provide health plans to them. This form reports which months the insured party and his or her family were covered under the health plan.
The 1094-B accompanies the 1095-B when it’s submitted and reports the transmittal of health coverage information returns. These forms are used to verify that these taxpayers have at least the minimum essential coverage.
Typically, insurance companies are responsible for filing form 1095-B, and 1094-B is the responsibility of the employer that is sponsoring the coverage.
ACA Forms: 1095-C & 1094-C
The 1095-C is the employer-provided health insurance offer and coverage. It shows the coverage that you as the employer are offering to your employees. This form is issued by companies with 50 or more full-time or equivalent employees and shows the coverage your company offered as well as whether or not your employee chose to participate.
Form 1095-B will be filed by the insurance provider, and Form 1094-C filing is going to be done by you, the employer.
Filing Requirements & Penalties
Employers are responsible for the C forms in the 1094 and 1095 camps. The IRS has a system that identifies non-compliant ALEs (applicable large employers) and issues penalties to those who don’t report. The IRS sends Letter 5699, which states that it believes the employer named therein is classified as an ALE but did not provide ACA forms per requirements. Once the IRS confirms the name used when filing, EIN, and the date any information returns were submitted. The IRS then sends Letter 226J, to let the employer know what penalties they’ve incurred. To date, employers across the U.S. have paid an excess of over $4 billion in fines. This penalty, often referred to as the sledgehammer penalty, can cost employers $2,700 per employee, based on the number of incorrect information returns.
A lesser penalty, known as the tack hammer penalty, can be incurred by employers if they met MEC, but the coverages weren’t affordable, or it didn’t provide the ACA standard for minimum value. For the tax year 2021, this penalty was $4,700 per full-time employee.
Excel at Your ACA Forms Filing & Organization
ACA coverage and information return filing are crucial for businesses that want to stay compliant with the current U.S. tax code. Without great organization and documentation of your business’s compliance, you could be subject to an audit.
eFile360 is your expert in all things ACA information return related. We can help you keep your 1095s and 1094s organized, send out the correct copies to your employees, and more. Check out our website for more information, and please reach out if you have questions or concerns.
Looking for help with your ACA forms this tax season? Sign up for a free eFile360 account today.