With the March 2 furnishing deadline behind us, most Applicable Large Employers (ALEs) have distributed Forms 1095-C to full-time employees. While furnishing is a major milestone, the compliance process does not end there. The next phase is IRS transmission and ensuring reporting accuracy.
For HR professionals, March is about confirming filings, validating data, and preparing for potential follow-up.
Step 1: IRS Electronic Filing
Employers filing 10 or more information returns are required to file electronically with the IRS through the Affordable Care Act Information Returns (AIR) system. This includes:
- Form 1094-C, the transmittal summarizing employer-level data
- All Forms 1095-C issued to employees
The electronic filing deadline is March 31.
Before filing, confirm:
- Aggregated ALE group status is correctly reflected
- Full-time employee counts align with payroll records
- Minimum essential coverage and minimum value certifications are accurate
- The authoritative transmittal is properly designated
Step 2: AIR System Acknowledgements
After submission, the IRS issues acknowledgements through the AIR system. These generally indicate:
- Accepted
- Accepted with errors
- Rejected
Rejected filings must be corrected and resubmitted promptly. Even accepted filings should be reviewed to confirm no schema or formatting issues were flagged.
If you use BAS for ACA data collection and reporting services, BAS will transmit your filings to the IRS by the applicable deadline. If BAS contacts you regarding a rejected or flagged transmission, it is important to respond quickly so corrections can be made within IRS timelines.
Step 3: Managing Employee Questions
After forms are distributed, HR may receive employee inquiries about:
- Codes reported on Lines 14 and 16
- Why coverage was listed as offered when waived
- Affordability calculations
Form 1095-C is informational and does not need to be attached to an individual tax return. HR’s role is to verify reporting accuracy rather than provide tax advice.
Step 4: Marketplace Notices and ESRP Risk
If a full-time employee receives a premium tax credit through a public exchange, the employer may receive a Marketplace subsidy notice. These notices require prompt review and response.
Best practices include:
- Confirming the offer of coverage for the applicable months
- Reviewing affordability safe harbor calculations
- Verifying measurement period status for variable hour employees
- Responding within the stated timeframe
Timely responses help reduce the risk of Employer Shared Responsibility penalties.
Step 5: Post-Filing Review and Planning
March is also an opportunity to evaluate internal processes:
- Are hire dates and waiting periods being tracked accurately?
- Do payroll deductions align with reported affordability data?
- Are mid-year contribution changes documented?
- Is eligibility data regularly reconciled with payroll?
Addressing discrepancies now makes next year’s reporting smoother and reduces correction risk.
Final Reminder
ACA compliance involves more than form distribution. Employers must:
- Offer minimum essential coverage that provides minimum value
- Ensure affordability under an approved safe harbor
- Accurately report those offers to employees and the IRS
With employee forms distributed, attention now turns to IRS transmission, validation, and documentation. Staying engaged through this final phase helps protect your organization and close out the reporting cycle successfully.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
