HR Question:

I know it’s almost time for the next ACA reporting period. What changes do I need to be aware of for the 2024 tax year?

HR Answer:

You’re right – the ACA (or Affordable Care Act) reporting season is right around the corner! While there are no major changes to the ACA forms and codes for the 2024 tax year, there are some items or updates to be aware of as we head into early 2025. If you’re unsure whether you need to report, check out our article on ACA reporting requirements.

Paper Filing Deadlines

The employee distribution deadline for the 1095-C forms is March 3, 2025.

When it comes to reporting, it’s all about the volume of forms you will be filing. In previous years, employers could file their 1095-C and 1094-C forms in paper format to the IRS by mail as long as they did not exceed 250 forms in total.

However, since 2023’s reporting tax year, the IRS now requires all employers with more than 10 forms to report through electronic methods. This could be done either directly through the IRS’s system or through a third-party provider set up to send to the IRS’s system (such as many HRIS providers). Any corrected forms would also be required to be submitted electronically. This is a service that Clark Schaefer Strategic HR offers to our clients.

For up to 10 forms:

If you have to submit 10 forms or fewer, you may file on paper. The paper filing deadline is February 28, 2025.

E-Filing Deadlines

The deadline for e-filing 1095-C and 1094-C forms to the IRS is March 31, 2025. Keep in mind that there could be additional ACA state reporting requirements for your organization with differing deadlines. The states to pay special attention to are California, New Jersey, Massachusetts, Rhode Island, and the District of Columbia.

Be aware of the full list of form types that are required to be sent to the IRS electronically based on the total number of forms submitted, including:

• Forms 1042–S
• 1094-series
• 1095–B and 1095–C
• 1097-BTC
• 1098, 1098-C, 1098–E, 1098-Q, and 1098–T
• All 1099 series
• Forms 3921 and 3922
• 5498-series
• 8027
• W–2G
• Forms W–2 (Wage and Tax Statement)
• U.S. Territory Forms 499R–2/W–2PR (Withholding Statement (Puerto Rico)
• U.S. Territory Form W–2VI (Virgin Islands Wage and Tax Statement)

There have always been fines attached to late filing with all of these forms. However, the amount has increased to $247.50 per day for each 1094 and 1095-C form for the 2024 reporting tax year (or $2,970 annualized per form).

Don’t miss our Free Webinar: All Your ACA Questions Answered!

Join Mary Mitchell, MBA, ACA Expert and Certified Healthcare Reform Specialist on November 21, 2024 from 1:00 pm – 2:00 pm ET as she answers FAQs and shares the information employers need to know to set themselves up for reporting success!

Learn More / Register

Updated Affordability Percentage and Penalties

The ACA imposes penalties on Applicable Large Employers (ALEs) that fail to offer affordable healthcare coverage to full-time employees. Penalties for non-compliance can quickly add up.

If an employer’s coverage is not affordable under one of the safe harbors as defined by the IRS and a full-time employee is approved for a premium tax credit for marketplace coverage, the employer may be subject to an employer-shared responsibility payment under Section 4980H(a) or Section 4980H(b).

For the 2024 tax year, the affordability percentage – the maximum amount of an employee’s pay that can be spent on “Employee Only” coverage in order to be considered “affordable” by ACA – decreased from 9.12% to 8.39%. Although there are no major changes to the ACA forms and codes for the 2024 tax year, the IRS has updated the ACA affordability percentage to 8.39%.

In preparation for Open Enrollment, keep in mind the affordability percentage will increase to 9.02% for the 2025 benefit plan year.

Additionally for 2024, the IRS has declared that the penalty under Section 4980H(a) will increase to $2,970 or $247.50 per month, and the penalty under Section 4980H(b) will increase to $4,460 or $371.67 per month.

With these increasing costs associated with noncompliance, it’s important for employers to carefully assess their group health plan offerings to make sure they’re aligning with ACA best practices. It is also essential to ensure that these plans provide comprehensive coverage to full-time employees, including at least one affordable self-only option that meets minimum value benefit requirements.

Thank you to Mary Mitchell, MBA, SPHR, SHRM-SCP, Certified Healthcare Reform Specialist, for contributing to this week’s HR Question of the Week.

Whether you’re new or experienced with ACA reporting, it can be a confusing process. Clark Schaefer Strategic HR is here to help! If you are unsure if your company should be reporting for ACA, we can help assess your employee calculations to determine if it is needed. We can also check your employee data for compliance and electronically file your company’s ACA forms with the IRS on your behalf. Contact us for your ACA reporting needs.