ACA Reporting Requirements: Increased Penalties and New Electronic Filing Steps
On June 29, 2015, President Obama signed into law, The Trade Preferences Extension Act of 2015 (“Act”), which significantly increases potential penalties for insurers and employers that fail to comply with the new Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting requirements first due in 2016.
As a recap:
- IRS Code 6055 requires insurers and self-insured plan sponsors to file reports with the IRS to verify whether an individual had MEC during a given calendar year to satisfy the Individual Mandate.
- IRS Code 6056 requires an “applicable large employer,” employers with 50 or more full-time equivalent to file reports with the IRS verifying whether it offered minimum value and affordable coverage to full-time employees and their dependents in a given calendar year to satisfy the Employer Mandate.
The new penalties are effective for returns and statements required to be filed in 2016 for the 2015 calendar year:
| Penalty | Old Amount | New Amount |
| Failure to file/furnish an annual IRS return or provide individual statements to all full-time employees | $100 | $250 |
| Annual cap on penalties | $1,500,000 | $3,000,000 |
| Failure to file/furnish when corrected within 30 days of the required filing date | $30 | $50 |
| Annual cap on penalties when corrected within 30 days of required filing date | $250,000 | $500,000 |
| Failure to file/furnish when corrected by August 1 of the year in which the required filing date occurs | $60 | $100 |
| Cap on penalties when corrected by August 1 of the year in which the required filing date occurs | $500,000 | $1,500,000 |
| Lesser cap for entities with gross receipts of not more than $5,000,000 | $500,000 | $1,000,000 |
| Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected within 30 days of required filing date | $75,000 | $175,000 |
| Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected by August 1 of the year in which the required filing date occurs | $200,000 | $500,000 |
| Penalty per filing in case of intentional disregard. No cap applies in this case. | $250 | $500 |
Click here to access the Act.
New Electronic Filing Steps
Additionally, this week the IRS provided more information on the process for electronic reporting to the IRS. The electronic filing system, known as the ACA Information Return (AIR) system, is significantly more complex than simply uploading a PDF file containing the pertinent information. Employers, insurers and third-party fulfillment or filing software developers are required to complete the following steps prior to being able to electronically submit any Reporting Forms:
- Register with the IRS’s e-services website, including submission of personal information about the person registering for the Submitting Entity
- Obtain an AIR Transmitter Control Code (TCC), a unique identifier authorizing each Submitting Entity to submit the Reporting Forms, and
- Pass a series of technical/system tests to ensure that Reporting Forms will be properly submitted when due.
The first two steps can be completed now. The third step is anticipated to become available later this year.
Click here for more information on the AIR program.
Reference: As seen on www.informedonreform.com, dated July 7, 2015.
