Important ACA Deadlines and Consent Information

Filing of 2018 Forms

  • Forms must be furnished to employees no later than January 31, 2019.
  • Forms 1094-C and 1095-C must be filed to the IRS by February 28, 2019 if filing on paper.
  • Forms must be filed by April 1, 2019 if filing electronically.
  • For final 2018 1094-C and 1095-C instructions, please visit

Consent to furnish 1095-C Statements electronically

Unless an employees has given specific consent to provide their form electronically, all forms must be furnished to employees by mail or delivered by hand.

For those employers that would like to furnish the forms electronically, the employee must confirm his or her consent electronically, to demonstrate the ability to retrieve the electronic form. A statement may be furnished electronically by informing the individual how to access the statement on the employer’s website. The consent must relate specifically to receiving the Form 1095-C electronically.

ACA Penalties Will Continue

A new round of penalty letters are expected to be sent out later this year. More than 300,000 proposed-penalty letters were sent by the IRS this summer and late last year for alleged violations of the ACA’s employer mandate in 2015. Employers can expect to see 2016 assessment letters before the end of 2018. Employers need to be prepared.

Penalties Are Proposed, Not Final

The proposed-assessment letters, called Letters 226J, are preliminary employer shared responsibility payment (ESRP) assessments, these are not final assessments. Some employers incorrectly assume that the IRS cannot be challenged, the IRS proposed assessment can and should be challenged if based on erroneous information.

Most assessments relate to errors on reporting forms, and the IRS has been willing to reduce the penalties if the employer provides an explanation to the IRS regarding the errors.

Under the ACA, employers with 50 or more full-time employees must submit Form 1094-C to the IRS, along with Form 1095-C; these forms contain information about their employees’ health coverage. Form 1095-C also is sent to full-time employees. A reporting error on one of these forms may result in a proposed penalty.

The IRS may provide the employer with a list of employees who, in the absence of being offered minimum essential coverage from the employer, received a premium tax credit. The list shows the months for which a premium tax credit was received and what codes were reported on Form 1095-C for each of these employees.

Often, employers realize that the employees on the premium tax credit list were simply assigned incorrect codes for certain months on Form 1095-C. For example, an employer may have failed to put in a code showing that an employee was not a full-time worker in a certain month. In response to the assessment letter, employers can provide correct codes for the premium tax credit listing, making a reduction in penalties more likely, they said.

The IRS is not asking for information on every one of a large employer’s full-time employees, just those on the premium tax credit list, they added.

Penalties Are Here for Now

Some believe they can ignore the assessment notices because they believe they are not subject to the penalty or that the ACA will be repealed. This is a mistake. Failing to timely respond to a notice will result in the IRS making the assessment based on the information it has. Ignoring the IRS assessment is not an effective strategy.

Employers that received an assessment notice for 2015 should look at their 2016 and 2017 reporting to see if they can expect additional notices.

The IRS continues to refine this penalty process, and it doesn’t look like the assessment letters are going away anytime soon, so being aware of them is important.




Tax Act Repeals the Penalties for the Individual Mandate

The employer mandate (a/k/a employer shared responsibility payment) has not been modified by the Tax Act, but the individual mandate penalty has been reduced to zero for years after 2018.  Thus, effective for years after December 31, 2018, the Tax Act effectively eliminates the individual mandate penalties.  Accordingly, beginning in 2019, the government will no longer attempt to collect the individual mandate penalties if an individual or family does not obtain healthcare coverage in 2019 and thereafter.  The elimination of the penalties does not technically remove the requirement to obtain healthcare coverage.  But without penalties there will be no enforcement and, in effect, no practical mandate to obtain coverage for 2019 and later years.


The IRS requires an employer or insurance company to report on Form 1095 whether an individual had ACA compliant coverage for the tax year.  Employer reporting on Form 1095 was not eliminated by the new Tax Act. For 2018, nothing has changed with respect to the ACA individual mandate or reporting on IRS Form 1095.  Employers that fall above the threshold of 50 full-time and full-time equivalents should still report for the 2018 year.

Definitions for Health Plans

  • Self-Funded Plan: Employer pays fixed costs (administrative fees and stop-loss premium) and claims costs incurred by covered persons and receives reimbursements if claims costs exceed levels set in the policy.
  • Fully Insured Plan: (traditional insurance plan) Company pays premiums, insurer collects premiums and pays health care claims based on policy purchased by employer.
  • Grandfathered Plan: plan in existence on March 23, 2010 that has not been changed in ways that substantially cut benefits or increase costs for consumers as long as employers notify employers that the plan is grandfathered and they have continuously covered at least one person continuously since March 23, 2010.

Notification to employees of existence of Health Marketplace:

Effective October 1, 2013.  Notify new hires within 14 days of their employment. Template available on DOL website at

Waiting Periods

Can’t be more than 90 days after employee becomes eligible. Can condition eligibility on completion of specified number of hours (no more than 1,200), completion of orientation period (not more than 30 days) or attaining job-specific certification/licensure.

Comply with W-2 Reporting Requirements

Employers must report cost of health coverage on employees’ W-2 forms, beginning Jan 2012 for large employers (those filing 250 or more W-2’s), optional for anyone with fewer than 250 employees until further guidance comes from the IRS.

Affordable Care Act Annual Adjustment

On May 21, the IRS announced in Revenue Procedure 2018-34 the 2019 shared-responsibility affordability percentage. Based on the ACA’s affordability standard as adjusted for inflation, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.86 percent of an employee’s household income, up from 9.56 percent in 2018.

Employers should not overlook the Affordable Care Act’s annual inflation-adjusted shit in cost-sharing limits for group health plan coverage. Steep penalties for failing to provide affordable coverage under the ACA’s shared-responsibility provisions.

An Annual Adjustment

The affordability standard is the highest percentage of household income an employee can be required to pay for monthly plan premiums, based on the least-expensive employer-sponsored plan offered that meets the ACA’s minimum essential coverage requirements.

2019 FPL Safe Harbor

Many employers use the FPL safe harbor to develop employee contributions for self-only coverage to avoid ACA penalties under Section 4980H(b).

“Using the FPL safe harbor also simplifies ACA reporting and coding of Form 1095-C,” which plan sponsors file with the IRS for each employee offered ACA-compliant health coverage, wrote Richard Stover and Leslye Laderman, consultants with Conduent HR Services, in their recent analysis.

For 2019, the maximum monthly premium contribution that meets the FPL safe harbor will be 9.86 percent of the prior year’s federal poverty level ($12,140 in most states for 2018) divided by 12, or $99.75.

Affordability Safe Harbors

Since employers don’t know their workers’ household incomes, to which the affordability threshold applies, the ACA created three safe harbors, any of which can be used in place of household income:

  • The employee’s W-2 wages—as reported in box 1—generally as of the first day of the plan year (see IRS Questions and Answers).
  • The employee’s rate of pay—hourly wage rate multiplied by 130 hours per month—as of the first day of the plan year.
  • The individual federal poverty level as of six months prior to the beginning of the plan year, since the FPL isn’t published for a given year until January.

2019 FPL Safe Harbor

  • The IRS can impose a shared-responsibility penalty when an employer with 50 or more full-time or equivalent employees—known as an applicable large employer (ALE)—”fails to offer minimum essential coverage to substantially all of its full-time employees and their dependent children during a month and at least one full-time employee receives a premium tax credit” through the ACA’s public marketplace exchange. An ALE satisfies the “substantially all” standard for any given month if it offered coverage to at least 95 percent of its full-time employees and their dependent children during that month.
  • For 2019, Stover and Laderman noted that actuaries estimate that the Section 4980H(b) penalty for failure to offer affordable, minimum-value coverage will be $3,750 per employee (or $312.50 per month), up from $3,480 (or $290 per month) in 2018.

Given the repeated failures to repeal or even improve upon the major shortcomings of the Patient Protection and Affordable Care Act (ACA), employers should continue to report on the offer of health coverage to their full-time employees.


Elimination of the ACA Individual Mandate Effective 2019

One of the significant updates for the Affordable Care Act, is the elimination of the Affordable Care Act’s individual mandate, effective 2019.

Under the current ACA regulations, the individual mandate requires most Americans to purchase a minimum level of health coverage. Those who fail to do so are liable for a penalty of $695 for an adult or 2.5 percent of household income, whichever is greater. The new Act accomplished the elimination of the individual mandate by reducing the penalty amounts to $0 and zero percent, respectively.

Employer Mandate and Other ACA Features Still in Place

The Act leaves many aspects of the ACA intact, including the individual marketplace, premium subsidies for those earning between 100% and 400% of the federal poverty rate, the ban on insurers charging more or denying coverage based on health factors, and Medicaid expansion.

Most significantly for employers, however, is the employer mandate and reporting requirements, which remain in force. Accordingly, applicable large employers will need to plan around the Code section 4980H(a) (“A”) penalty — which can apply if an employer does not offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee buys subsidized marketplace coverage — and the Code section 4980H(b) (“B”) penalty — which can apply if an employer offers full-time employees coverage that is not affordable or does not meet minimum value requirements.

In 2018, A penalty is $2,320 (or $193.33 per month) multiplied by the total number of full-time employees (minus 30). The B penalty is $3,480 (or $290 per month) for each full-time employee who buys subsidized marketplace coverage (capped by the amount of the A penalty).



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