Avoiding IRS Penalties with Monthly ACA Compliance

As the IRS is expected to follow through on the ACA mandate fervently, it is critical that employers comply with the ACA process to avoid any penalties from the Internal Revenue Service. As per the mandate, companies with 50 or more full-time employees (or those who work equivalent to full-time employees) are required to provide minimum essential coverage to at least 95 percent of their workforce, along with their dependents. The coverage must also meet the minimum value and should be affordable for employees.

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Some organizations may feel like they can get away without following the proper guidelines but in the long run, there is far more value in adhering to the process than getting hit by multiple penalties. These penalties may result in a substantial amount of loss if you are no€™t careful. Moreover, there are plenty of benefits for following the ACA compliance as well. Some of the benefits of monthly ACA compliance are given below.

1) Consistent Records of Coverage

The implementation of monthly ACA compliance allows you to have a record of the various offers of coverage available to your workforce. On a month-by-month basis, you can get more data when it comes to the number of employees who enrolled for or declined the coverage as well. The more employees you have, the more important it is to follow the monthly ACA compliance process.

2) Better Preparation

One of the best aspects of following monthly ACA compliance is that you get to know which employees will become eligible ahead of time so that the necessary documentation can be prepared in advance. This ensures that no employee ever misses any offers of coverage and helps the company to be more efficient when it comes to extending coverage to its employees.

3) Preventing Penalties

By following the proper monthly ACA compliance process, you will always be in a better position to check the information contained in IRS penalty letters and set the record straight whenever necessary. By not following the process properly, you might end up with penalties for no reason just because you don’t have the proper information recorded.

What is the Latest ACA Reporting Schedule?

1) 1094-C/1095-C has to be filed (paper) with the IRS by February 28, 2020.

2) 1095-C has to be furnished to your workforce by March 2, 2020.

3) 1094-C/1095-C has to be electronically filed with the IRS by March 31, 2020.

Failure to meet the above deadlines can lead to penalties under IRC 6721/6722.

Penalties for Not Following the ACA Mandate

If employers file the required ACA information after the deadline but within 30 days of the last day, they might have to pay up to $50 per return not filed. Once the 30-day period is over till August 1st, the penalty goes up to $110. After August 1st, the penalty will jump up to $270 per return not filled which can result in a ton of loss for the company overall.

So always pay on time to avoid huge IRS penalties.

 

Questions? Need Help with ACA compliance? Form 5500 or wrap plan documents?

 

Call:

(515)-244-2424

ACA Compliance Remains a Concern for Employers

Ever since the ACA came into being, a lot of organizations have always struggled to understand all the requirements and guidelines that came with it. It has always remained an issue for employers. Some companies, on the other hand, have chosen not to take it as seriously as they need to. Sometimes, employers send their reports and never heard anything back until much later, when they got swamped with waves of letters from the IRS.

What are the Different Types of Penalties Incurred by Employers?

There are mainly two types of penalties received by companies from the IRS. One pertains to the lack of coverage provided to employees by the employer and the other is related to the affordability of the plan offered. If an employer has refused to provide coverage to their workforce, then they can get hit with up to $2000 of penalty fees per employee. If the plan offered isn’t€™t affordable, the penalty fee may even go as high as $3000 per employee, which is a substantial amount of money for sure.

How to Stay ACA Compliant?

Looking into the ACA healthcare benefits is a complex process that can be quite overwhelming for employers or HR professionals. However, it can be broken down into smaller steps and implemented in a far simpler manner by taking a few things into consideration. Once your company has been identified as an applicable large employer, you need to start identifying employees that are eligible for health benefits. This can be done using different processes, each with their pros and cons. They are as follows:

1) Monthly Measurement

With this method, ACA eligibility is accessed on a monthly basis and is dependent on the number of hours the employee has worked the previous month. If he or she worked at least 130 hours during the month, then they can be considered as a full-time employee. This method is the easiest to implement and doesn’t€™t require complicated calculations.

2) Look Back Measurement

With this method, eligibility is determined based on a span of 3 to 12 months defined as the measurement period as opposed to on a month-by-month basis. This method saves time as employers need to do it only once or a few times a year. However, the risk of getting a bigger fine is higher in the event of mistakes or miscalculations being made. Implementation is also quite complicated, especially when new hires join the workforce causing overlaps of measurement periods.

3) Extending Coverage to All

This is probably the safest method to avoid raking in huge penalties. There is no need to access eligibility or face difficulty in implementing measurement periods. This method also attracts top talent due to the extended coverage, making the business more competent and efficient in the long run.

At the end of the day, every business owner needs to pick the method that best works for themselves and their businesses to ensure that they can stay ACA compliant and remove any possibility of getting huge fines from the IRS.