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5 questions about health care reporting this tax season

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If health care reporting wasn’t complicated enough, Republicans’ proposed Affordable Care Act (ACA) replacement plan, known as the American Health Care Act (AHCA), muddies the waters even further.

Related: Congress is in over its head on AHCA

As your clients work to fulfill their 2016 reporting obligations by the March 31 deadline, they likely have many questions about what, how, and even if they still have to file for the 2016 ACA reporting year.

Here are five of the most common ACA questions that we answer at SyncStream Solutions.

1. Republicans recently introduced an ACA replacement plan. Do we still need to comply with the ACA?

True, the AHCA would eliminate the penalty for failing to provide minimum essential coverage to employees, effectively repealing the employer mandate. However, it’s still just a proposal. The bill will likely undergo many iterations before it ever crosses President Trump’s desk, and we have no way of knowing what the final plan will look like.

For now, all requirements and deadlines associated with the ACA are still in place, so employers should complete their filing and reporting as they normally would this season. Employers must provide employees with the 1095-C, file on time with the IRS, and make a good faith effort to get the information right to avoid IRS penalties.

2. What is Form 1095-C?

The 1095-C is the form that indicates whether and when an employer offered health insurance coverage to its employees at an affordable rate. It’s how the IRS tracks which employers are complying with the ACA’s employer mandate.

Related: H.R. 1628: 5 AHCA change highlights for agents

3. Which employees should receive a 1095-C?

All applicable large employers — those who maintained 50 or more full-time equivalent employees in the previous calendar year — are required by the IRS to distribute a 1095-C to all full-time employees that worked for the company at least one month during the previous year; all ACA full-time equivalent employees (those who worked on average 30 hours a week); and all part-time employees who were offered and enrolled in health care coverage, but only if the employer offered self-insured coverage.

4. What is Form 1094-C?

Form 1094-C is essentially the cover letter that is submitted to the IRS alongside an employers’ 1095-Cs. It summarizes information about the employer, including how many 1095-Cs are being filed, whether minimum essential coverage was offered, and whether an applicable safe harbor was used. Any employer required to submit 1095-C forms must also file the 1094-C.

Related: Employers remain unprepared for IRS reporting

5. How do we prove that we’re ACA-compliant?

Employers must demonstrate ACA compliance by submitting Forms 1094-C and 1095-C to the IRS before March 31. Companies that have more than 250 employees must file the information electronically. Typically smaller employers can file by mail, though the deadline is earlier, and has already passed for this reporting year.

Once the IRS receives the information, it will assign a receipt ID to the employer. From there, the employer will receive one of three statuses: accepted, accepted with errors, or rejected. For submissions that are returned with errors, the IRS provides little direction on where the error occurred, so it can be difficult and time-consuming for employers to sort through data to identify and correct the mistake. Employers could go through several rounds of this process before their forms are accepted.

For this reason, if your clients haven’t already filed their documentation with the IRS, they should do so immediately. Employers looking to simplify the process should consider investing in an intelligent solution that can catalogue, interpret, and file all the required information properly.  These solutions also can ensure accountability when all is said and done.

While attempts to repeal and replace the ACA are already underway, it’s the beginning of a long process. Employers should stay the course in complying with the IRS this tax season and should continue to collect the required information to more easily bridge to the next health care requirements when the time comes.

Arthur Tacchino, health care reform expert and Chief Innovation Officer at SyncStream Solutions, a health care reporting and compliance company.

See also:

Why more workers blew off employer health coverage

Trump to ease in changes, mid-market broker predicts

Employers may be stickier

What a Trump presidency means for the ACA