ACA Reporting: Changes and Updates for 2020

Though some employers wondered if ACA reporting would even be required this year amidst the chaos the pandemic created for HR and payroll departments, the ACA reporting requirements are still in place—with a few changes.  MP’s HR services shares what you need to know for your 2020 ACA filing. 

4 ACA Reporting Updates: 

1. The Supreme Court hearing: The case against the ACA, declaring it unconstitutional and seeking to have it overturned, is still ongoing.  There was a hearing last November and the Supreme Court is now exploring a few questions: 
   • Is the individual mandate, requiring people to purchase health insurance, unconstitutional?  Is it unconstitutional after the tax penalty has been removed? 
   • Should the whole ACA be struck down, or just the individual mandate? 

With the Biden-Harris administration, the likely outcome of this case has been changed radically.  Since Biden was in office when Obama’s administration created the ACA, he’s been vocal in his stance to uphold the ACA.  If anything, employers might want to be ready for the ACA to be expanded under the Biden-Harris administration.  

2. The marketplace rates have stabilized: After the pandemic, when so few people actually used their healthcare to its full extent (or sometimes at all), rates have been affected.  While they usually rise, in 2020 they stabilized.  This is a bit of good news for workers and employers amid a difficult year.  

3. ACA reporting requirements are unchanged: As mentioned above, even though some employers wondered if they’d get off the hook this year for ACA reporting, it will still be required.   HR consulting experts like MP’s suggest that employers handle this process as soon as possible.  (Note that MP clients can use our payroll software and HR services to make this process infinitely easier and faster.)  

4. The majority of 226J Letters have gone out: The majority of letters from the IRS about potential 2016/2017 ACA Employer Shared Responsibility Payment liabilities have gone out to employers who they estimate are out of compliance.  Employers should respond to those letters promptly and accurately in the window of time required by the letter.  MP’s HR experts suggest that employers respond to those notices prior to simply paying the penalties required.  Our team has worked with hundreds of companies before on 226J letters.  Often, these penalties can be reduced or completely dismissed if responded to promptly and with appropriate supporting documentation.   

2 Changes to ACA Reporting  

1. Due dates have been pushed back: Though ACA reporting is still required this year, employers have gotten some grace in the form of later due dates.  These are the new due dates: 
   • Form 10-95-B: Originally due one Jan 31^st, but now due on or before March 2^nd, 2021 
   • Form 1095-C: Originally due Jan 31^st, but now due on or before March 2^nd, 2021 
   • Form 1094-B and 1094-C: Due dates remained unchanged. Form 1094-B due March 31^st, 2021.  Form 1094-C due March 1^st, 2021 if filing on paper, due March 31^st, 2021 if filing electronically. 

2. New Codes for Individual Coverage Health Reimbursement Arrangement (ICHRA): ICHRA plans are a relatively new alternative to offering group health insurance plans.  Their main draw is that they offer some flexibility for employees, so they can choose the plan that meets their specific needs the best. Of course, ICHRAs will require new codes on ACA reporting.  These are the new codes for ICHRAs: 
   • 1L: This code is used to denote that an ICHRA is offered to the employee and that it was affordable based on the primary residence zip code.  Employers should use this code when an ICHRA is offered to the employee only (no spouse or dependent(s)), with affordability being determined by using the employee’s primary residence location zip code. 
   • 1M: This code is used to denote that an ICHRA is offered to the employee and their dependent(s) (though not the spouse).  It was affordable based on the primary residence zip code of the employee.   
   • 1N: This code is used to denote that an ICHRA is offered to the employee and their dependent(s), and their spouse.  It was affordable based on the employee’s primary residence zip code.   
   • 1O: This code is used to denote that an ICHRA is offered to the employee (though not the spouse or dependent(s)) and that it was affordable based on the employee’s primary employment site zip code.   
   • 1P: This code is used to denote that an ICHRA is offered to the employee and their dependent(s).  It was affordable based on the employee’s primary employment site zip code.   
   • 1Q: This code is used to denote that an ICHRA is offered to the employee and their spouse and dependent(s).  It was affordable based on the employee’s primary employment site zip code.   
   • 1R: This code is used to denote that an ICHRA is offered to the employee, spouse, and dependent(s).  It was deemed unaffordable. 
   • 1S: This code is used to denote that an ICHRA is offered to a non-full-time employee.