Beware of ACA Penalties
for Employers

Important Deadlines to Prevent ACA Fines

For the first time in 2016, employers were required to report employee health insurance coverage under the Affordable Care Act (ACA), which was overwhelming for many. What made it a little more manageable, however, was the IRS pushing out the deadlines. You got an extra two more months to distribute employee copies and three more months to e-file with the IRS.

Form	Recipient Copies Due	Due to IRS
1095-B, 1095-C	March 3, 2025	Electronic filing due March 31, 2025

Be Careful: Penalties for NonCompliance Are Steep

You must comply with ACA reporting requirements, or risk steep penalties. Failure to File Correct Information Returns, imposes a penalty per return for each of the following failures related to filing ACA Forms :

• Failure to file
• Filed with a missing/incorrect TIN (or other missing or incorrect information)
• Filed untimely
• Filed on paper when electronic filing was required (incorrect media)
• Filed in an incorrect format, (unprocessable)
• Any combination of the above

The penalty for failing to file or furnish correct ACA forms to the IRS or the recipient is $330 per form with a maximum fine of $3,987,000. Special rules apply that can increase the per-statement and total penalties. If there is intentional disregard of the requirement to file the returns or furnish the required statements, there is no maximum limit to the possible penalty.

Capturing and Tracking Necessary Data

The information gathering process is challenging for many businesses. To capture all the data required for 1095 reporting, you’ll need to pull from four major sources or internal departments: HR, payroll, benefits and time-tracking systems. This requires careful coordination, sharing and monitoring to complete the forms accurately and on time.

The key items you need to track:

• Total employee count based on hours of service (including full-time and full-time equivalents)

Most likely pulled from payroll or time-tracking system

• Employee name, Social Security number and address

Most likely pulled from HR records

• Health coverage offered
• Employee share of the lowest-cost monthly premium for self-only coverage
• Months the employee was enrolled in coverage
• Affordability safe harbor provisions or other relief
• If self-insured, information about the covered individuals, including Social Security numbers and months of coverage

Most likely pulled from HR records and benefits

Strict security is also necessary. When the employee’s name and health insurer appears on the same form, the data is considered protected health information (PHI) subject to the HIPAA Privacy Rule. Using a solution that is SOC-certified and HIPAA-compliant, like efileACAforms.com, can provide an added layer of protection to comply with the restrictions which limit uses and disclosures of employee information

A few essential Do’s and Don’ts can ensure a smooth filing process:

• DO notify employees that they will be receiving a 1095-C and may need information from it to complete their previous year tax filing.
• DON’T file more than one 1094-C authoritative transmittal.
• DO file corrected returns as soon as possible after an error is discovered.
• DON’T file more than one 1095-C per employee. If your organization has different divisions with different benefits – and an employee moves between divisions during the year – you’ll need to consolidate data onto one 1095-C.

By following the guidelines above, you can drastically improve your chances of a smooth and accurate ACA filing process. However, even with the best intentions, data errors can occur – which can result in extra time and effort to correct. You can trust efileACAforms.com to utilize the latest data verification processes to ensure your forms are filed and distributed correctly the first time.