Answers to your top five ACA IRS reporting questions

Person reviewing IRS reporting documents with a computer and papers on table.

Are you ready for 2022 Affordable Care Act-required reporting to the IRS? Do you need to verify the accuracy of prior year forms?

With "transitional good faith relief" in the rear-view mirror, the industry is anticipating an increase in penalty letters, which will likely lead to more audits. Employers cannot afford to get their 1094s and 1095s wrong.

Check out the top five pressing questions from clients on ACA IRS reporting and the answers from our benefits experts.

Q1. We didn’t know about ACA reporting before now. What if we did not file in prior years?

The best course of action is to retroactively file for prior years. You should also contact legal counsel.

Q2. What if we discover a mistake made in a prior year filing, such as missing a newly eligible employee?

The best practice is to file retroactively. You'll need to carefully recalculate the employee’s eligibility based on whatever measurement periods your organization selected. You should also contact legal counsel.

Q3. What data do we need to file?

You'll need a combination of plan sponsor information, plan information, census and enrollment data. If your plan is self-insured, you will also need dependent information.

Q4. How do we determine if our organization is at risk for an IRS ACA penalty?

The answer lies in the quality of your organization's data and the integrity of your measurement period reporting, IRS reporting and/or filing. To mitigate risk, spot-check a few different recipients under various scenarios, such as mid-year new hires, mid-year terminations, part-time to full-time, FT to PT, COBRA, etc. Make sure you've filed for all Employer Identification Numbers.

Q5. What happens if our organization gets a penalty letter, and how do we respond?

The first thing to do is contact the IRS and request an extension. Secondly, review the reason for the penalty and determine if it makes sense. Assuming it makes sense, hire an independent third party to audit your reporting and/or filing in question and make any needed changes to your original return.

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