E-File of ACA 1095 Forms … What Can Go Wrong?

Under the Affordable Care Act (ACA), Applicable Large Employers are required to report to the IRS the type and cost of the medical plans offered to their full time employees. For many employers, the creation of these forms can be done by an internal system or though a HRIS system which they use in their business. It is common however for these systems to not have the ability to transmit the data to the IRS electronically, which is known as E-File.

For this reason many companies look to outside professionals to assist them in this transmission of their forms 1094 and 1095 to the IRS through the IRS’ AIR system. The process would seem straight forward, however there are many areas in which employers are experiencing problems. These problems are expected to increase for 2016 reporting due to the fact that the ‘Good Faith Effort’ provision under ACA is expiring. In short what this means is that you as an employer will be responsible for the accuracy of your created ACA forms.

The reason this is a challenge for many E-File vendors is the simple fact that they truly don’t understand ACA reporting. The overwhelming majority of ACA E-File vendors are companies who transmit 1099’s to the IRS and entered the ACA business as an extension of their normal business practices. The challenge with this from an employers perspective is that these vendors do not fully understand the reporting in the first place and thus are not prepared to assist employers with ensuring they are reporting correctly.  This would include errors in their coding, incorrect forms, avoiding ACA penalties, who should actually receive a form 1095, etc.  A simple quiz of your ACA E-File software vendor will likely reveal exactly how much they understand about the reporting.

And don’t forget about ACA E-File compliance!  Yes, forms 1095 contain Protected Health Information (PHI) and thus requires you as an employer to maintain HIPAA and HITECH compliance.  This includes how you transmit the data to your vendor (must be securely, encrypted), entering into a Business Associate Agreement, etc.  Learn more about ACA E-File HIPAA compliance.

The most important thing to remember as an employer is that this is all YOUR responsibility, and you cannot delete any of the fines for being wrong.  Use this ACA reporting software quiz to help you make sure you have the right vendor for your organization.