Employers with more than 50 full-time or equivalent employees must comply with the Affordable Care Act (ACA) requirements. These Applicable Large Employers (ALE) are required to file the ACA Form 1095 annually. As this year’s filings are being prepared, employers should consider five important things when setting up for 2023.
The Affordability Threshold Has Changed
The Employer Shared Responsibility Payment requirement of the ACA sets a maximum amount an employer can charge their employees for healthcare coverage in order to be considered “affordable.” This threshold has been lowered for 2023 to 9.16% from 9.61%. This means employers cannot charge as much for healthcare coverage in 2023 unless wages are increased.
The details of how this affects your business should be discussed with your provider or an ACA specialist if you are self-funded.
Review Safe Harbor Codes
Employers must estimate their employees’ household incomes to establish whether the amount they charge for healthcare coverage is affordable. Since employers rarely know their employee’s household income, the IRS has established Safe Harbor codes to provide options for an employer to calculate the affordable standard.
Selecting the appropriate safe harbor code for each employee is critical to ensure compliance. Employers who file using Aatrix eFile can rest easy, our 130-point error checking process will let you know if there is an issue with the selected code.
The ESRP Penalties Have Increased Again For 2023
ESRP penalties fall into two categories “A” and “B.”
- “A” penalties are assessed to ALEs that do not offer group health coverage to at least 95 percent of their full-time employees and are set at $2,880 ($240/month) per employee.
- “B” penalties are assessed to ALEs that make an offer of coverage that is either unaffordable or does not meet the ACA’s minimum value standard and is set at $4,320 ($360/month)
Choose The Correct Form
The IRS provides two different form sets to report ACA information, Form 1094-B and Form 1094-C (transmittal forms), and Form 1095-B and Form 1095-C (information forms), for employers to report offers of coverage for 2022.
Forms 1094-B and 1095-B are used by self-funded plan sponsors that are not ALEs. Forms 1094-C and 1095-C are used by ALEs.
Aatrix Filing Deadlines (subject to change)
- The 1095 employee copy is due to Aatrix on March 1st by 3:00 PM to guarantee printed copies are postmarked by the March 2nd deadline.
- The Federal 1095 copy is due to Aatrix on March 30th by 3:00 PM to meet the IRS filing deadline of March 31st.
- View all of Aatrix eFile’s deadlines here.
State Filing Deadlines
- Employers must also report insurance information to the California Franchise Tax Board by March 30th by 3:00 PM, only if their insurance providers do not report it.
- New Jersey
- By March 30th, by 3:00 PM, employers must submit 1095-C health coverage forms to the New Jersey Division of Taxation.
- Rhode Island
- The ACA filing deadline for submitting 1094-C and 1095-C forms to the state is March 30th by 3:00 PM.
- Washington D.C.
- April 28th, by 3:00 PM, is the 2022 ACA filing deadline for employers transmitting forms to the state agency.