2021 ACA Reporting Requirements for Employers
IRS ACA Reporting Requirements for 2021 - An Overview- Updated October 21, 2020 - 8.00 AM by Admin, ACAwise
When the Affordable Care Act was passed, the IRS updated their Internal Revenue Code to include Sections 6055 and 6056. These IRC sections outline the protocol for reporting ACA compliance and offers of coverage to the IRS.
These instructions will help employers better understand their
ACA reporting requirements.
Changes in 2021 ACA Reporting
1. IRS Mandates the Reporting of ICHRA
By 2021, IRS mandates the reporting of ICHRA on Form 1095-C to the employers who offered ICHRA to their employees. With an ICHRA (Individual coverage health reimbursement arrangements), an employer provides a class of employees with a monthly allowance that can be used to purchase individual health coverage from the marketplace.
The reason, IRS mandates the employers to report the ICHRA plan on ACA Forms is to figure out the affordability of an ICHRA plan. Hence, employers who choose to administer ICHRA plans are required to include the new ICHRA codes and other information (such as Zip codes and employees’ age)
on their Forms 1095.
Generally, the ICHRA offered by the employer is considered affordable, if the employee’s out-of-pocket expense for the lowest-cost silver plan on the local exchange is less than 9.83% of the employee’s household income (for the tax year 2021).
2. New ACA Codes and Lines added to the Form 1095-B / 1095-C
The IRS has released drafts of 2020 IRS Forms 1095-B/C in the month of July. The drafts have clearly defined the ICHRA reporting mandates.
Form 1095-B Changes
Form 1095-C Changes
Under the ACA employer mandate, Applicable Large Employers (ALE) must offer ICHRA to the eligible employees that are affordable and provide minimum value. Affordability for each employee is calculated based on the following criteria:
- Employee’s age,
- The lowest-cost silver plan available in the employee’s market area (either primary residence location or primary work location as determined by the employer) and
- Employee’s pay
For this purpose, the IRS includes the following additional fields on Form 1095-C
- Employee’s age on January 1
- Zip code by month (Line 17)
The IRS might release the final instructions for 2020 at the end of this year. Stay updated with ACAwise to get the recent updates of the ACA Forms.
3. The IRS Extends the Deadline
ACA Reporting Requirements under Section 6055
IRS Section 6055 states that any person who provides minimum essential coverage to individuals must report the offered coverage information to the IRS and furnish statements to individuals. Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and other coverage the Department of Health and Human Services designates as minimum essential coverage.
Reporting ACA Form 1095-B, Health Coverage
The IRS designed Form 1095-B for health insurance issuers or carriers, plan sponsors of self-insured group coverage, and executive departments/agencies of governmental units to report those they covered on Forms 1094-B and 1095-B. It is used to report information about the individuals (employee, spouse, and dependents) who had certain health coverage for some or all months during the year.
Health coverage provider must file Form 1095-B for each of their recipients, as each provides information on the employee’s health insurance coverage for each month of the year.
In addition to filing this Form with the IRS, mandated filers must also furnish their recipients with a copy of the Form 1095-B.
ACA Reporting Requirements under Section 6056
The IRS Section 6056 states that Applicable Large Employers must provide minimum essential coverage to their full-time employees and report that to the IRS and furnish statements to their employees.
ALEs must use Forms 1094-C and 1095-C to report their health coverage information offered to their employees under section 6056.
Reporting ACA Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
IRS designed Form 1095-C for requesting ALEs to report the health coverage information offered to the employees. It also helps the IRS to determine whether an ALEs owe a payment under the employer shared responsibility provisions, section 4980H.
You must also report to the IRS using Form 1095-C, with information on your part time, retired, terminated, rehired employees. When reporting Form 1095-C, you must be aware of Section 4980H safe harbor and Offer of coverage codes.
Employers must file Form 1095-C for each of their employees, as each provides information on the employee’s health insurance coverage for each month of the year.
In addition to filing this Form with the IRS, mandated filers must also furnish their employees with a copy of the Form 1095-C.
ACA 1094 and 1095-B/C Reporting Deadlines for 2021
Employee copy distribution
Mar 02, 2021
Mar 31, 2021
Feb 28, 2021
Click here to know more about the State filing deadlines.
Information Required for 2021 ACA Reporting
To complete the ACA Forms under Sections 6055 and 6056, you'll need the following information:
- The covered individual or employee's data (name, address, and SSN/TIN)
- The plan provider's data (name, address, EIN, and contact info)
- For self-insured group health plans, provide the plan sponsor’s information (name, address, EIN, and contact info)
- The offer of coverage code for each recipient/employee, broken down by month
- The recipient/employee’s premium share of coverage, by month
- Any safe harbor relief codes that are applicable
- The covered individual's spouse and dependent(s) information, if applicable (name, SSN or DOB, and months covered)
Meeting your 2021 ACA Reporting Requirements
ACAwise helps to file your ACA Forms with the IRS, State and distribute the 1095 copies to your employees on-time. ACAwise handle all the special scenarios such as ICHRA, COBRA, Rehire, terminated, etc.
We provide two different reporting services for you to choose from, based upon your requirements.
Let us take care of your ACA Reporting!
We file your 1094/1095 Forms with the IRS and postal mail the copies to employees before the deadline.
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- ACA Reporting Deadline
- 1095-C Code Sheet
- Form 1095-C Instructions
- Form 1095-B Instructions
- ACA Reporting Vendor
- 2020 ACA Penalties
- ACA Requirements
- Letter 5699
- Letter 226J
- 2020 Revised ACA Form
- Form 1095-C
- Form 1095-B
- ICHRA Affordability 2020
- Notice CP220J
- ACA Full-Time Employees
- Penalty Notice 972CG