In 2015, the employer shared responsibility provision of the Affordable Care Act (ACA) Employer Mandate took effect, requiring that applicable large employers (ALEs) offer their employees affordable health coverage that includes minimum value coverage (60% or more of healthcare costs). This mandate affects most employers with 50 or more full-time or full-time equivalent employees and requires employers to either offer qualifying health insurance or make an annual shared responsibility payment.
ALEs are required under the ACA’s Employer Mandate to offer minimum value health coverage to at least 95% of their full-time workforce and ensure that this coverage is affordable to each employee based on IRS guidelines on safe harbors.
Failure to comply with all provisions of the ACA can lead to significant penalties. With a number of deadline updates and reporting extensions in 2023, we’re here to help you prepare your business for filing, furnishing, submitting fees, and adhering to all new ACA regulations.
Preparing for Deadlines and Changes in 2023 and Beyond
A number of key deadlines have been changed or updated for 2023, impacting businesses preparing for the 2022 tax year.
ACA Furnishing Deadline & Permanent Policy Changes - 2023
Based on the IRS’ recent finalization of a rule on the reporting of health care coverage, ALEs can now permanently benefit from a 30-day automatic extension to furnish Form 1095-C to full-time employees by March 2nd (formerly January 31st). This finalized rule regarding 1095-Cs applies to 2023 reporting and all future years of ACA reporting. Note that on leap years, the deadline will be March 1st.
ACA Deadline for Electronic Filing - 2023
The IRS is actively encouraging electronic filing by providing employers with immediate confirmation of submission and immediate approval or denial of all submitted ACA documents (Form 1094-C and Copies of Form 1095-C). The electronic filing deadline is also later than the paper filing deadline, providing over an extra month of preparation. Employers that wish to file electronically should submit materials by March 31, 2023.
ACA Deadline for Paper Filing - 2023
Only employers with 250 or less 1095-C forms are eligible to file 2022 ACA 1095-C information via paper filing. The deadline for submission is February 28, 2023.
Employers should keep in mind that proposed IRS regulations are likely to further reduce employer eligibility in the 2023 tax year, allowing only businesses with ten or fewer 1095-C forms to submit by paper filing.
Deadline for PCORI Fees – 2023
In the event that your business offers any self-insured plans that are utilized by two or more employees, you may need to submit PCORI fees for each employee. The deadline for fees is July 31, 2023, and the fee has recently been raised from $2.79 to $3.00 per person.
Note: For all federal ACA deadlines, a deadline is extended to the following business day if it falls on a legal holiday or weekend.
A small number of states require the reporting of ACA Forms with federal and state agencies. For New Jersey, Massachusetts, California, and Rhode Island, the deadline is March 31st. For the District of Columbia, the deadline is April 30th. More states are currently considering legislation that mirrors these existing states’ regulations.
Avoiding Noncompliance Penalties
In 2023, any ALE that does not offer minimum coverage to 95% of its full-time workforce must pay $2,880 per full-time employee (a 4.7% increase from 2022). This penalty applies under Section 4980H(a) of the ACA’s Employer Shared Responsibility Provisions.
Under 4980H(b), any ALE that does not offer minimum value coverage (or affordable coverage based on IRS guidelines) must pay $4,320 per full-time employee (a 5.2% increase from 2020). For more information on ACA-compliant coverage options, explore our related article.
For either of the above penalties to apply, the employer must have at least one full-time employee receiving subsidized healthcare coverage via the Exchange or Marketplace.
In the event that a large employer fails to file at all or files late or incomplete forms, they may receive Letter 972CG and/or Letter 5005-A. A host of other IRS Letters resulting from minor or major errors can trigger compounding issues with penalty notices, fees, assessments, and required employer responses.
Ensure ACA Compliance in 2023 and Beyond
Navigating ACA compliance can be an overwhelming process, especially for employers with a large workforce. CAVU’s Enhanced ACA Service streamlines ACA administration, tax filing, and data management to grant you peace of mind with compliance, employee tracking, and more.
Contact us today to learn more about how we can help you simplify ACA, payroll, and make the best decisions for your business.