IRS Will Require Most ACA Employer Reporting (Forms 1094 and 1095) Be Filed Electronically for 2024
The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to report whether they offered minimum essential coverage (MEC) that was adequate and affordable to full-time employees. However, employers of any size with self-insured plans (including level funded) must also report months of coverage for all enrolled individuals. Regardless of funding arrangement, ACA reporting for ALEs is handled via IRS Forms 1094-C and 1095-C, which are provided to employees and filed with the IRS. Non-ALEs are responsible for ACA reporting if they sponsor a self-insured plan, which includes level funded plans. ACA reporting for non-ALEs with a self-insured plan (including level funded) is handled via IRS Forms 1094-B and 1095-B.
2024 ACA Employer Reporting Changes
In prior years, employers could file their ACA reporting forms by paper if they were filing fewer than 250 returns. Beginning in 2024, employers filing 10 or more returns in the aggregate must file electronically. This ends the option to file by paper for virtually all employers unless a hardship waiver is granted.
Employers must file Forms 1094-B/1095-B and 1094-C/1095-C with the IRS by February 28, 2024, or April 1, 2024, if filing electronically.
Employers must also furnish the applicable Form 1095-B or 1095-C to their applicable employees by March 1, 2024. The due date for furnishing Form 1095-B/1095-C is automatically extended from January 31, 2024, to March 1, 2024. Thus, no additional extensions will be granted.
IRS AIR Program
Currently, electronic filing is done using the IRS ACA Information Returns (AIR) Program. The IRS has provided a lot of guidance and information on electronic reporting. However, the guidance is generally very technical and intended for software developers and other entities that plan on providing electronic reporting services. Employers will need to prepare to engage with an ACA reporting vendor to complete the electronic filing via the IRS AIR Program.
Electronic filing waiver
Employers may request a waiver from the required electronic filing of returns if it can prove the electronic filing will create an undue hardship, or is contradictory to religious beliefs.
Requests for waivers must be submitted at least 45 days prior to the due date of the returns, but no later than the due date of the returns. Waivers are requested utilizing Form 8508 Application for a Waiver from Electronic Filing of Information Returns. If this is your first time requesting a waiver for any of the listed forms, the applicant will automatically be granted a waiver.
If claiming undue financial hardship, the applicant must obtain current cost estimates from two service bureaus or other third parties and attach them to Form 8508. The ACAPrime prices listed on the website linked above will count as a cost estimate for purposes of completing Form 8508.To access IRS Form 8508: https://www.irs.gov/pub/irs-pdf/f8508.pdf
If the employer is required to file electronically but fails to do so, and does not have an approved waiver, the employer may be subject to a penalty of $310 per return for failure to file electronically unless it can establish reasonable cause.
The penalty for failure to file a correct information return is $310 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,783,000.
The penalty for failure to provide a correct payee statement is $310 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,783,000.