The Internal Revenue System says employers can now do a trial run of their electronic form filing for reporting requirements under the Affordable Care Act, giving nervous employers and their benefit advisers a way to test for readiness in advance of the reporting deadlines.
The IRS has recently opened up its Affordable Care Act Assurance Testing system which allows employers to see if their reporting software is correctly filling out the 2014 Forms 1094 and 1095. In November, the testing system will be cued up with the 2015 reporting forms.
Starting in 2016, applicable large employers must report whether an individual is covered by minimum essential coverage and that an offer of minimum essential coverage that provides minimum value was made to each full-time employee.
Applicable large employers, generally meaning employers with 50 or more full-time employees (including full-time equivalent employees) in the preceding calendar year, use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information required.
Any employers filing 250 or more forms must do so electronically. The deadline for electronic filing is March 31, 2016.
The IRS submission requirements for using the ACA Assurance Testing system advise software developers to “read the instructions carefully prior to preparing the submission.”
“Code definitions for Offer of Coverage Codes and Safe Harbor Codes are defined in the instructions and are not provided in the narrative but must be included within your submission where appropriate,” the IRS cautions.
Having the ability to track and manage the required data should be happening now, according to Michael Weiskirch, a principal at EmployeeTech Inc. He says the requirements “have put benefit advisers and their clients at a crossroads and have created a small panic in selecting the ‘just right’ solution.”
A flurry of ACA reporting solutions have entered the market over the last two years, some free-standing while others are to be integrated with existing HR, payroll or benefit systems.
For 2015, employers who file will have protection even if their filing is incorrect or incomplete, as long as they show they made good faith efforts to comply with the ACA reporting requirements, Weiskirch says. A “good-faith effort” is defined as an employer simply attempting to complete the forms.
The good-faith effort for 2015 tax year will disappear in 2016, however, and penalties will apply for incorrect information in subsequent years.