Important Reminder about ACA IRS Reporting and the New Requirement for ALL SIZE Employers to File Electronically

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

The ACA requires Applicable Large Employers (ALEs) to report to the IRS whether they offered minimum essential coverage (MEC) that was affordable and provided minimum value to full-time employees. Employers of any size with self-insured plans must also report months of coverage for all enrolled individuals.

Do Municipalities Have to Complete the ACA Reporting?

For municipalities with HealthTrust medical plan coverage, the Member Group is considered to have self-insured employer health plan coverage for IRS reporting purposes; HealthTrust is a self-insured Multiple Employer Welfare Arrangement (MEWA), not a health insurance issuer or carrier.  The IRS instructions for Forms 1094-B and 1095-B provide that plan sponsors are responsible for reporting self-insured employer health coverage. 

For this purpose, each participating employer in a MEWA (each HealthTrust Member Group) is considered the “plan sponsor” for the medical coverage offered to its employees.

IRS Requires Electronic Filing for ACA Reporting in 2024

The filing requirements for CY2023 remain the same as in previous years, with the exception that electronic filing is required for all employers filing more than 10 returns (including, in the aggregate, forms 1099 and W-2).

Reporting for coverage provided during the 2023 calendar year is due:

• To employees and other covered individuals by March 1, 2024.
• To the IRS by April 1, 2024 electronically, which is required if 10 or more returns are filed (see details below).

Electronic Filing via the AIR System is Required! In February 2023, the IRS released final regulations that make electronic reporting for Forms 1094-B and 1094-C and Forms 1095-B and 1095-C mandatory for ALL employers filing 10 or more returns in the aggregate, beginning with the 2023 reporting season. For returns filed in calendar year 2024, employers who are required to file 10 or more Forms 1094-C or 1095-C, Forms 1099, Forms W-2, and many other IRS forms in the aggregate must file electronically. Any employer who has previously filed via paper will either need to file using the Affordable Care Act Information Returns (AIR) system or partner with a vendor that will file on the employer’s behalf.

The new “aggregation of returns” rule means that in calculating whether an employer has at least 10 returns and is required to file electronically, the employer’s Forms W-2, 1099, and multiple other returns (in addition to the Forms 1094-C and 1095-C) are all included together in the 10-return count. Given the aggregate nature of the electronic filing requirement, it is highly likely that most municipalities will need to file their ACA reporting documents electronically via the AIR system or through a vendor.

HealthTrust strongly recommends that all Member Groups who have previously filed their 1094-B and 1094-C forms, or 1095-B and 1095-C forms, on paper begin the process of setting up an AIR system account as soon as possible or finding a vendor for this service. Filings are due on April 1, 2024, and it can take weeks to months to apply for and receive a transmitter control code (TCC) from the IRS, which is needed for AIR system filings that are not done through a vendor. You would not need to complete the TCC application process if you contract with a vendor that has their own TCC code.

The AIR system only allows for electronic submission of the forms using an “XML” format.  This format generally requires the use of a third party vendor to create or convert the ACA forms.  If the cost of contracting with a vendor creates an undue financial hardship, a Hardship Waiver can be requested using form 8508. There are specific time frame requirements and requires two cost estimates when submitting the waiver.

Keep in mind that the penalty for failure to timely file correct forms 1094-B and 1094-C or 1095-B and 1095-C for the 2023 plan year is $310 per form, and transitional good faith relief has been eliminated, unless the ALE has filed for and received a hardship waiver. Thus, Member Groups will incur penalties if they file their forms late, making it imperative that they set up their AIR system account in a timely manner.

Additional Resources

Tax form filing vendors are prevalent through a web search. While we cannot recommend a vendor, two examples are Yearli and Accountability.

HealthTrust Member Groups can access additional resources on the Secure Member Portal (SMP) including recent messages, FAQs, and presentations about how to complete the forms.

For further information on how these IRS reporting requirements apply to your specific circumstances, please consult with your legal, tax or other professional adviser.

Erica Bodwell is the Benefits and Coverage Counsel at HealthTrust. David Salois is the Member Relations Representative at HealthTrust.