The 2020 ACA Reporting Landscape for US Employers: What’s New?

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The 2020 ACA Reporting Landscape for US Employers: What’s New?As you’re running the last lengths of the Affordable Care Act (ACA) reporting race for 2019 – getting 1095-Cs to your employees by March 2nd and to the IRS by either February 28 for paper filers or March 31 for electronic filers - it’s time to focus on what’s new for 2020.

Is the ACA employer mandate still in place for 2020 (and beyond) aka do US employers still need to comply? And are there any new or updated ACA reporting requirements in 2020 for employers to be aware of?

The Affordable Care Act remains law of the land for US employers in 2020

Despite all the legal turmoil these past few years, the employer mandate and all ACA reporting requirements around that remain in full force. Non-compliance will continue to result in significant IRS penalties.

In December 2018, a federal judge in Texas ruled the entire Affordable Care Act unconstitutional and a year later, the 5th US Circuit Court of Appeals affirmed the finding that the individual mandate was invalid. But it instructed the district court to rehear the matter and "to employ a finer-toothed comb on remand and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate." So, the saga continues – the latest is that on January 21, 2020, the Supreme Court denied the challengers' motions to expedite consideration of the petitions and will proceed on a regular timeline. This essentially means that the Supreme Court won’t rule until after the 2020 election.

Healthcare will – again – be a hot topic in the 2020 election, but meanwhile, US employers with 50 or more full-time employees or full-time equivalents must stay compliant with all ACA coverage and ACA reporting requirements in 2020 and most likely beyond.

Read who needs to be compliant, what to do, and when and what the penalties are for non-compliance.

New: State Filing Requirements!

Now that you’re finally used to the federal employer mandate being around with its strict reporting guidelines, some states are creating their own ACA-style reporting requirements for employers as a way to enforce their own individual mandate – yay! The expectation is that even if the federal reporting requirements are modified or eliminated, these states will uphold their own state requirements…

Read more about which states have requirements and when they are in effect.

2020 ACA Reporting Requirements, 2020 ACA Affordability Percentage, and 2020 ACA Penalties - Updates

There are always at least 4 yearly updates to be aware of:

The ACA Affordability Percentage has Dropped for 2020!

The rate for determining whether an employer-provided health care plan is affordable to employees was set at 9.86% of household income for 2019 but will now drop to 9.78% for plan years beginning in 2020.

Read more about the affordability calculation in our post “A Guide to 2020 ACA Affordability Percentages for Employers – with Affordability Calculator!”

2020 Reporting Deadlines

These are the same every year (although the first one keeps getting postponed, don’t count on it).
What are they?

  • January 29, 2021 (because January 31, 2021 is a Sunday):
    • Provide IRS Form 1095-C to all ACA-defined full-time employees.
  • February 26, 2021 (because February 28, 2021 is a Sunday):
    • For paper filers – Mail transmittal of Form 1094-C and included 1095-Cs, to the IRS.
  • March 31, 2021:
    • For electronic filers – E-file Form 1094-C and included 1095-Cs with the IRS.

2020 Employer Penalties

Unlike the affordability percentage, penalty amounts go up every year. For 2020 this means:

  • Employer Shared Responsibility Payment for failure to offer Minimum Essential Coverage:
    • An ALE subject to this penalty will pay $2,570 for each full-time employee (regardless if they took a tax credit) after excluding the first 30 Full-Time employees from the calculation.
  • Employer Shared Responsibility Payment for failure to offer Affordable Minimum Essential Coverage that provides minimum value:
    • An ALE subject to this penalty will pay $3,860 for each Full-Time employee (if they obtained a subsidy on an exchange) after excluding the first 30 Full-Time employees from the calculation.
  • The Non-Filing Penalty:
    • An employer who chooses to not fulfill their year-end 1095-C and 1094-C responsibility will be charged up to $560 per eligible employee – this penalty is similar to the W-2 non-filing penalty.

Updates to the 1095-C form

The 1095-C form changes slightly every year as well. However, the IRS likes to wait until the last minute so stay tuned in December 2020 – we will keep you posted!

Need help with the ACA tracking and reporting requirements? Let us take that worry off your hands; learn more about Integrity Data’s ACA Compliance Solutions.

Written by Integrity Data

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