ACA Compliance & Reporting Deadlines - The Complete Guide for 2023

This article is a guide for ACA compliance and reporting that covers updated regulations, upcoming deadlines, penalties, and administration tips for both small and large employers.

Affordable Care Act (ACA) Overview

The Affordable Care Act (ACA) was created with the intent to make health insurance more accessible and less expensive to more Americans across the country.

This legislation included federal labor laws requiring ACA compliance, which impacts companies in every state. Although small businesses and large employers may be required to comply with ACA as part of the employee benefits administration process, the majority of rules and regulations are required for employers with over 50 full-time equivalent (FTE) employees. This is the most commonly known part of ACA, that is, the employer mandate or requirement for these larger companies to provide access to health insurance for employees. 

ACA Compliance for Small Businesses

When it comes to ACA compliance for a small business, which the Internal Revenue Service (IRS) considers a business with 49 or fewer employees as a small business. Full-time employees include full-time equivalent employees.

Coverage for Small Businesses

Although coverage is not required to be provided by employers, small businesses may be eligible to buy coverage through the Small Business Health Options Program (SHOP). 

Reporting for Small Businesses

The ACA reporting requirement for small businesses is that the employer must withhold and report an additional 0.9% on employee wages or compensation that exceeds $200,000.

Employers may also be required to report the value of health insurance coverage that they provide to each employee, on each employee’s Form W-2. 

It is important to note though that employers who provide self-insured health coverage to employees must file an annual return reporting certain information for each employee they cover.

Payments & Credits for Small Businesses

Any employers who have fewer than 25 full-time employees (or full-time equivalent employees), provide employees with a qualified health insurance plan option, and cover at least 50% of those employees’ premium costs, may be eligible for the Small Business Health Care Tax Credit. The tax credit can be up to 50% of the premiums paid by the small business. 

ACA Compliance for Applicable Large Employers (ALE)

Generally, an Applicable Large Employer (ALE), under ACA regulations, is any employer with 50 full-time employees. This also includes full-time equivalent employees. ACA compliance for an ALE is a bit more complex than it is for small businesses. 

The IRS has also provided resources to help determine if your business is an ALE.

Coverage for Applicable Large Employers 

Depending on the state, employers with only 100 or fewer employees may be eligible to purchase insurance through SHOP. Otherwise, all employers with 50 or more employers are covered.

Reporting for Applicable Large Employers

Just like small business owners, ALE’s must withhold and report an additional 0.9% on employee wages or compensation that exceeds $200,000. Applicable Large Employers may also be required to report the value of health insurance coverage that they provide to each employee, on each employee’s Form W-2. 

It is important to note that just like small businesses, ALEs who provide self-insured health coverage to employees must file an annual return reporting certain information for each employee they cover.

The most important component of ACA reporting that Applicable Large Employers need to file is an annual information return and share the information with employees. This return reports whether or not the employer offered health insurance to employees, and if so, what health insurance was offered.

Payments & Provisions for Applicable Large Employers 

ALEs must either offer affordable minimum essential coverage that provides minimum value to full-time employees (including dependents of employees) or they may owe an Employer Shared Responsibility Payment. 

Important to note for employers who are self-insured: Employers may be required to pay a fee to help fund the Patient-Centered Outcomes Research Trust Fund.

ACA Reporting Deadlines for 2023

The updates to ACA in 2023 included the IRS issuing final regulations regarding ACA reporting, including the fact that the good-faith transition relief (detailed below) has ended. 

Updated ACA Deadlines

What this means for employers, is that they will now need to meet the stated deadlines in order to avoid hefty penalties for non-compliance (see below). The IRS also included, within the new regulations, the original proposed 30-day extension to furnish ACA reporting forms 1095-C to individuals. 

The extension means the new due date for furnishing Tax Year 2022 Form 1095-C to employees is March 2nd, 2023.

2023 ACA Filing Deadlines

The following dates are the key 2023 federal ACA deadlines for the 2022 tax year that employers to know:

• Deadline to paper file annual ACA 1095-C information
  • Only available to employers with fewer than 250 forms 
  • February 28, 2023 
• Deadline to furnish 1095-C forms to each full-time employee
  • March 2, 2023
• Deadline to electronically file Forms 1094-C and 1095-C
  • March 31, 2023
• Deadline for the Patient-Centered Outcomes Research Institute fees for 2022 health plans
  • July 31, 2023

Historic ACA Filing Deadlines

2022 ACA Filing Deadlines

The following dates are the key 2022 federal ACA deadlines for the 2021 tax year that employers to know:

• Deadline for Employee Fulfillment of 1095-C Form
  • March 2, 2022
• Deadline for Paper Filing to the IRS
  • February 28, 2022
  • *For employers with fewer than 250 employees only*
• Deadline for e-Filing to the IRS
  • March 31, 2022

ACA “Good-Faith Relief” Update (No Longer Active)

The ACA “Good-Faith Relief” is no longer available to employers, starting with the 2021 filing year. 

The “Good-Faith Relief” used to allow employers who reported incomplete or incorrect info on their returns to show they made a good-faith effort to file and furnish correctly and on time. This included missing or inaccurate taxpayer-identification numbers (TIN). However, the 2020 reporting year was the last year that such relief was offered to employers. 

In essence, the IRS has decided that there are no more excuses for improper filing. As a result, modern, cloud-based ACA management software has become not only more popular among employers, but all the more necessary to stay compliant with ACA regulations.

IRS & ACA Statute of Limitations

It is important for Applicable Large Employers to remember that there is no time limit for the IRS to assess penalties on employers that do not comply with the employer shared responsibility provisions (aka “pay or play”) for a given year. 

As a result, the IRS could assess such penalties many years after the violation occurred. This is why it is crucial that employers keep all records, employee data, and documents pertaining to ACA compliance and ACA management.

ACA Penalties for Non-Compliance

Employers should be aware that IRS penalties have increased for 2023 and are expected to increase again for 2024. 

4980H(a) Penalty

For the 2023 tax year, the 4980H(a) penalty amount also known as the hammer penalty, is $240 a month per employee, which, annualized is $2,880 per employee.

4980H(b) Penalty

For the 2023 tax year, the 4980H(b) penalty amount is $360 a month per employee, which, annualized is $2,880 per employee. This penalty is also known as the “Employer Shared Responsibility Penalty for failure to offer coverage that meets affordability and Minimum Value (MV)”. It is assessed on a per-violation basis as well. 

Failure to File Penalty

The 2022 tax year penalty for not filing correct ACA information returns by the mandated deadlines is $280 per return. If an employer misses the late filing deadline (August 1st, 2023) the IRS can assess the Failure to File penalty per return not filed accurately and/or timely. 

Failure to Furnish Penalty

The 2022 tax year penalty is also $280 per return and doubles for intentional disregard, just like the failure-to-file penalty when it comes to failing to furnish Form 1095-C to employees by the deadline.

ACA Compliance Tips for 2023

There are several practices that employers can employ in order to manage ACA compliance.

Monitor Any IRS Feedback or Notices After ACA Filing

Employers should always keep an eye out for IRS feedback on their filings so that if something goes wrong they know immediately. 

Generally, there are four kinds of filing feedback an employer may receive from the IRS:

• Accepted
• Accepted with errors
• Rejected due to bad data
• Rejected due to IRS system errors

Use a Modern, Cloud-Based ACA Management Solution

Proper ACA management starts with ensuring that any IRS-ACA logic codes are compliant. This is something that many types of ACA management software can do. 

Simply put, a modern, cloud-based ACA management solution is the easiest path to ACA compliance. When thinking about purchasing an ACA management solution, employers should keep a few things in mind. 

Features to look for in ACA management software: 

• Compliance tracking to determine eligibility 
• Automatic updates to stay compliant with changing legislation and regulations
• Form 1095 and 1094 generation
• E-File services
• Form Audits for potential errors
• Safe Harbor Affordability Calculator 
• ICHRA Calculator 
• Tax Form Repository and Audit Reports
• IRS inquiry and Audit Trail 
• IRS Audit Defense

Be Aware of Cyber Security Threats

Just like anything else done online or any other kind of information stored on the internet, it is important to keep ACA reporting information safe. 

Employers can help maintain cyber security by: 

• VPN-protection monitoring
• Firewall Monitoring 
• Penetration Testing
  
  

Final Thoughts on ACA 

ACA reporting and compliance can be tricky, but employers who are proactive in managing ACA as a whole will have a much easier time, especially when coupled with a benefits administration or ACA management solution.

Want to learn more about other federal, state, and local labor laws or requirements for employers? Check out more articles on the Employer Insights Blog or subscribe for updates. Or, for easier and more "risk-free" compliance, employers may want to consider a labor law poster service. 

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