Employer ACA Requirements Unchanged
While President Trump may have asked federal agencies to “lessen the burden” of the Affordable Care Act (ACA), the IRS will offer no reprieve for employers this year. Individuals, on the other hand, may be cut some slack.
On February 15, the agency announced that it would no longer reject individual income tax returns that do not include health insurance information. While that may potentially ease the pressure off of individual taxpayers, the IRS stopped short of rolling back reporting requirements for businesses. That, it argued, would have to wait for a full ACA repeal.
So Long, Individual Mandate?
The news was met with some confusion in the tax and health care community. While the IRS announced it would not automatically reject returns without insurance information, it also made clear that it reserved the right to follow up with individuals afterwards.
One of the cornerstones of the ACA is the so-called individual mandate, or the requirement that most Americans maintain a health insurance plan. To help facilitate that aim, the law also requires businesses with 50 or more full-time employees to offer health insurance. Because the punishment for noncompliance is a tax penalty, the IRS has naturally served the role of enforcer since the law’s inception.
The agency requires that these 50+ employee companies file 1095-C and 1094-C forms, which simply outline the benefits they offered that year. These reports are used by the IRS to track who has complied with the employer and individual mandates. Employers are required to provide workers with a copy of the 1095-C by March 2. The deadline to file both reports with the IRS is March 31.
If the IRS chooses not to follow-up with taxpayers who leave out benefits information in their personal tax returns, that could well mean a toothless individual mandate. That being said, businesses waiting for their own olive branch may not be so lucky.
While apparently softening reporting requirements for individuals, the IRS remains committed to enforcing employers’ ACA obligations. Last year, the deadline was moved repeatedly and penalties were waived for employers who could demonstrate a “good faith effort” to file on time. As the first deadlines rapidly approach, that leniency doesn’t appear to be the case for this year’s round of reporting.
For the time being, the ACA is alive and well—and to be on the safe side, employers should proceed with their required filings as they would have before.
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