Five Resources Essential for ACA Compliance in 2021

2021 is well underway and with the Biden administration likely to ramp up legislation around the ACA, employers need to be sure they are compliant with the healthcare law. 

Below, Trusaic identifies the top five essential resources for complying with the ACA in 2021. 

Employers that are unfamiliar with their reporting requirements under the ACA’s Employer Mandate should review our Get to Know the ACA guide to learn their responsibilities for complying with the healthcare law for the 2021 tax year. Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs) organizations with 50 or more full-time employees and full-time equivalent employees are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is Affordable for the employee. Employers that fail to comply are subject to Internal Revenue Code (IRC) Section 4980H penalties.

Our Get to the Know the ACA guide also provides context into the shifting political landscape surrounding the ACA. Since the law was first established in 2010 and reporting under the Employer Mandate was first required in 2015, the law has seen a significant amount of change. For more context, head to our Get to Know the ACA pillar page.

If your organization has received a penalty notice for failing to comply with the ACA’s Employer Mandate, you know that responding to the notice can be a serious undertaking. Our How to Respond to IRS Letter 226J infographic outlines the process for you and shows you how to respond. 

Our Letter 226J infographic also dives into the different types of responses your organization may receive after responding to an IRS penalty notice. The agency issues different responses via Letters 227. There are several different types of 227 letters your organization can receive depending on whether or not the agency agrees with the materials you’ve provided in your Letter 226J response. For example, if the IRS acknowledges that the information you provided in your response to Letter 226J is correct and accepts it, the agency will issue a Letter 227K stating that you do not owe an employer shared responsibility payment. Check out the infographic to find out more on the Letter 226J penalty notice process.

If you’re not familiar with IRS Letter 226J and don’t have a lot of confidence in your ACA compliance process, our Get to Know Letter 226J guide explains the details around the penalty notice and what triggers cause an employer to receive one. In addition to the specifics around the Letter 226J penalty notice, our Get to Know Letter 226J guide delves into the other types of penalties the IRS can issue to employers for failing to adhere to their ACA Employer Mandate responsibilities. 

For example, the IRS can issue Letter 5005-A under IRC section 6721/6722 to ALEs that fail to furnish Forms 1095-C to their full-time employees or file Forms 1094-C and 1095-C with the IRS. These notices focus on the failure of ALEs to distribute Forms 1095-C to employees and to file Forms 1094-C and 1095-C with the tax agency by required deadlines. Check out the Get to Know Letter 226J guide to learn more about these penalties and how best to avoid receiving them.

One area of the ACA that still creates challenges for health insurance brokers and HR directors is determining affordability. With the affordability threshold changing annually and the stakes high for failing to offer affordable healthcare, we’re here to help. Our IRS Affordability Safe Harbors post outlines the rate of pay, W-2 and federal poverty line affordability safe harbors your organization can claim to prevent ACA penalties under IRC 4980H(b). 

In addition to providing examples of safe harbors in action, our IRS Affordability Safe Harbor post addresses the many plan nuances that can affect affordability for your employees, including health reimbursement arrangements (HRAs), opt-out payments, wellness plans, and flex credits. Implementing safe harbors when administering your health plan is one thing. Communicating this information to the IRS is another. Check out the IRS Affordability Safe Harbor post if you need assistance setting up health coverage affordability for the 2021 tax year.

As ACA compliance experts, we understand that sometimes you have unique challenges. We’ve curated a list of frequently asked ACA questions and answered them. Check out our ACA FAQs to see how we’ve helped organizations like yours. From seasonal employee details as they pertain to the ACA’s Employer Mandate to who is required to file the Forms 1095-C and for what types of employees, our ACA FAQs have the answers to your organization’s questions. 

Thank you for being an ACA Times subscriber. We hope that you will find this material to be helpful in 2021. We’ll be with you every step of the way, providing new and informative material to assist you in dealing with the ACA and compliance with the IRS.

If your organization needs assistance identifying ACA penalty exposure this year, contact us to have an ACA Penalty Risk Assessment performed at no cost to you.

To learn more about ACA compliance in 2021, click here.

*Article Written By ROBERT SHEEN