14 Sep Prepare for Increased Penalties on Failure to File ACA Information Returns with the IRS

Companies with more than 50 full-time employees should start preparing to file the proper IRS Information Returns related to employer-provided healthcare coverage.

Beginning in February 2016, employers (and insurers) must file complex information returns designed to help the IRS enforce the Affordable Care Act (ACA). These forms (the 1095 series), will indicate whether or not an employer provided affordable healthcare coverage and help the IRS determine if companies or individuals are subject to any non-compliance penalties. They will also help determine if individuals are eligible for a tax credit when purchasing a plan on a state or federal marketplace. Not only must employers file these forms with the IRS, but they must also provide copies to their employees for proof of coverage when they file their personal returns.

While the February 2016 deadline may seem quite some time in the future, the complexity of the data required by the IRS means that employers should start collecting and compiling information on each of their employees now. Accounting and Human Resources should work in tandem to compile this data and should expect to work closely with their insurance provider on collecting specific data on the coverage provided to each employee and his or her dependents. In a nutshell, the information employers are required to provide tells the IRS if each employee was 1)employed full time; 2) whether or not the employer offered affordable healthcare coverage to the individual employee and his or her dependents; and 3)specific enrollment information for each employee and any dependents.

Employers who file the proper returns and report this information for the 2015 year will not be penalized for any mistakes according to the IRS which says it will apply a “good-faith effort” to information filed for 2015. However, employers who fail to file an information return will face doubled penalties for their failure to file.

The chart below offers a bit more detail on which forms your company may need to file depending upon the size of your organization and whether you are self-insured or fully-insured.  (Click on the image to enlarge it.)


For additional information or clarification on your specific plan, you should contact your broker. Of course, if you have not elected healthcare coverage for your staffing firm yet, Barrow Group can help you find a MEC or MVP healthcare plan for your staffing employees and help prevent any additional penalties for your failure to provide coverage. Additionally, Barrow Group, LLC provides each of our clients with a handy information return workbook and a series of employee communications to help you in conveying important ACA related information to your employees. Feel free to contact our ACA Specialist if you would like more information.

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