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.
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 not 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?