Ever since the Affordable Care Act was signed into law, business owners have had to keep a close eye on how many employees they’ve had on the payroll. This is because a company with 50 or more full-time employees or full-time equivalents on average during the previous year is considered an applicable large employer (ALE) for the current calendar year. And being an ALE carries added responsibilities under the law.
What must be done
First and foremost, ALEs are subject to Internal Revenue Code Section 4980H — more commonly known as “employer shared responsibility.” That is, if an ALE doesn’t offer minimum essential health care coverage that’s affordable and provides at least “minimum value” to its full-time employees and their dependents, the employer may be subject to a penalty.
However, the penalty is triggered only when at least one of its full-time employees receives a premium tax credit for buying individual coverage through a Health Insurance Marketplace (commonly referred to as an “exchange”).
ALEs must do something else as well. They need to report:
- Whether they offered full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan
- Whether the offered coverage was affordable and provided at least minimum value
- Certain other information the IRS uses to administer employer shared responsibility
The IRS has designated Forms 1094-C and 1095-C to satisfy these reporting requirements. Each full-time employee and each enrolled part-time employee must receive a Form 1095-C. These forms also need to be filed with the IRS. Form 1094-C is used as a transmittal for the purpose of filing Form 1095-C with the IRS.
3 key deadlines
If your business was indeed an ALE for calendar year 2023, put the following three key deadlines on your calendar:
February 28, 2024. This is the deadline for filing the Form 1094-C transmittal, as well as copies of related Forms 1095-C, with the IRS if the filing is made on paper.
March 1, 2024. This is the deadline for furnishing the written statement, Form 1095-C, to full-time and enrolled part-time employees. Although the statutory deadline is January 31, the IRS has issued proposed regulations with a blanket 30-day extension. ALEs can rely on the proposed regulations for the 2023 tax year.
In previous years, the IRS adopted a similar extension year-by-year. The extension in the proposed regulations will be permanent if the regulations are finalized. No other extensions are available for this deadline.
April 1, 2024. This is the deadline for filing the Form 1094-C transmittal and copies of related Forms 1095-C with the IRS if the filing is made electronically.
Whether you’re a paper or electronic filer, you can apply for an automatic 30-day extension of the deadlines to file with the IRS. However, the extension is available only if you file Form 8809, “Application for Extension of Time to File Information Returns,” before the applicable due date.
NEW!! Please note that the electronic filing threshold for electronic returns required to be billed on or after January 1, 2024, has been decreased to 10 or more returns. This threshold is applied in the aggregate to certain information returns that are original or corrected. The electronic filing requirement does not apply if you request and receive a hardship waiver (Form 8508).
Alternative method
If your company offers a self-insured health care plan, you may be interested in an alternative method of furnishing Form 1095-C to enrolled employees who weren’t full-time for any month in 2023.
Rather than automatically furnishing the written statement to those employees, you can make the statement available to them by posting a conspicuous plain-English notice on your website that’s reasonably accessible to everyone. The notice must state that they may receive a copy of their statement upon request. It needs to also include:
- An email address for requests,
- A physical address to which a request for a statement may be sent, and
- A contact telephone number for questions.
In addition, the notice must be written in a font size large enough, including any visual clues or graphical figures, to highlight that the information pertains to tax statements reporting that individuals had health care coverage. If someone requests a statement, you must fulfill the request within 30 days of receiving it.
Identify your obligations
Although the term “applicable large employer” might seem to apply only to big companies, even a relatively small business with far fewer than 100 employees could be subject to the employer shared responsibility and information reporting rules. We can help you identify your obligations under the Affordable Care Act and assess the costs associated with the health care coverage that you offer.
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