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Act Responsibly to Minimize Penalty Exposure

Sep 08, 2016

ACA Penalties for Missing Information? Maybe Not, if You Act Responsibly

​The ACA Times
September 7, 2016

At the close of July, the IRS issued proposed regulations around the filing of forms 1094 and 1095. Under IRC 6055, certain large employers must file information returns 1094 and 1095 for every individual receiving health coverage under the employer’s health plan, including the enrollees Tax Identification Numbers (“TINs”). 

For many 2015 filers who filed electronically, some of the enrollee identifying information used to file did not match IRS records, resulting in error alerts from the IRS during the filing process. A common source of these errors were differences in the spelling of legal names between the filers records and IRS records. Other filers found that they were missing key information, such as TINs for enrollees. 

In general, under IRC 6721, filers who submit inaccurate returns with the IRS may face risk of penalties. However, there are steps that can be taken to minimize this risk. 

One of the keys? Acting responsibly. Under Section 6055, filers who are required to report to the IRS on the enrollees in their health plans must generally make an initial solicitation to obtain the TIN of each enrollee, and up to two subsequent “annual” solicitations requesting the TIN if not received. The new guidance released by the IRS clarified that health providers may generally satisfy the requirement for the initial solicitation by requesting enrollees’ TINS as part of the application for coverage. 

The IRS also clarified that if a “first” or “second” annual solicitation is required, the first annual solicitation must generally be made 75 days after the filer receives a substantially complete application from the prospective enrollee, and the “second” must generally be made by December 31 of the year following the year after the filer received a substantially complete application. 

The IRS indicated that although these regulations are not final, they can be relied upon until final regulations are issued. In addition, the proposed regulations specifically allow for the continued reliance on an existing IRS guidance which provides that the “first” annual solicitation by December 31 of the year the filer receives a substantially complete application from the prospective enrollee (or January 31 if the application is substantially complete in December). 

If you are an employer required to comply with IRC 6055, and you find that you are missing data throughout the process of preparing for filing with the IRS, take steps to act now while there is time. If you are confused, it may make sense to consult a knowledgeable vendor specializing in ACA services. Acting responsibly now just might save you big bucks in the long run.

For questions, please contact a member of your b&p Sales Team - 888.722.3373.

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