By Christy Abend
Requirements around the Affordable Care Act (ACA) are seemingly ever-changing and 2023 stayed true to form. Throughout the year, we have seen changes to penalties, small business filing regulations, and a drop in affordability percentages that could see employers finding their contributions to healthcare premiums increasing. With so much happening, it can be easy to miss something. Catch up below on what has happened so far in 2023 with the ACA.
Since the inception of the ACA in March 2010, regulations have evolved, and penalties have steadily risen year over year. In March 2023, the IRS announced that 4980H employer mandate penalties for non-compliant applicable large employers (ALEs) for 2024 are rising again. The following new penalty amounts will be effective beginning with the 2024 tax year:
The rising costs of noncompliance should serve as a further incentive for employers to examine their group health plan offerings to help ensure broad enough coverage to full-time employees with at least one self-only option that is affordable and provides minimum value benefits. To learn more about penalty increases, watch our recent ACA webinar.
On August 23, 2023, the IRS announced the 2024 affordability percentage for employer health coverage.
The affordability threshold — used for employer shared responsibility provisions to determine whether employer-sponsored health coverage is considered affordable — decreased significantly from 9.12% in 2023 to 8.39%. These percentages are used to determine the amount of household income eligible individuals can contribute toward the cost of coverage for it to be considered affordable. This percentage is important when setting employer contributions for self-only coverage for plans beginning on or after January 1, 2024. Coverage will be considered affordable if an employee’s required contribution for self-only coverage does not exceed 8.39% of their household income.
The cost of insurance coverage continues to rise year over year, and a share of those cost increases are typically passed along to employees. With the affordability percentage decreasing again, employers who are planning to toe the line with their healthcare premiums might find that while the cost is increasing, employee contributions might need to be lowered.
While organizations were in the midst of filing returns this year, the IRS made a change that could have a big impact on how smaller businesses file information returns in 2024.
On Feb. 23, 2023, a final rule (TD 9972) was passed, expanding the requirement to file certain information returns electronically, including ACA returns. In an effort to modernize its return-filing process and work towards the elimination of paper filing, the IRS is lowering the 250-return threshold for mandatory electronic reporting to 10 for returns due in 2024 or later. Thankfully, the electronic filing threshold for returns required to be filed in 2023 remains at 250. But beginning in the 2024 reporting season, if an employer has more than 10 forms to file, they must be filed to the IRS electronically.
Additionally, this rule will require employers to aggregate the number of different returns they file when determining whether the 10-return threshold is reached. Whereas the previous 250-return threshold applied separately to each type of information return, the new rule requires you to combine your total number of returns across forms, including information returns (ie. Forms W-2, 1099 and 1095), income tax returns, employment tax returns, and excise tax returns. If your combined number of forms equals more than 10, you will have to file electronically.
So, starting in 2024, it appears that only the smallest of small businesses may have the option to file on paper.
You can learn more about this new rule by reading, “Big Changes to ACA Electronic Filing Rules for Small Businesses”.
Staying on the topic of electronic filing, the IRS added restrictions to what years of 1094/1095 corrected filings they will accept electronically. While they will continue to accept original filings for any year listed on irs.gov, they will now only accept corrected filings for years that are less than six years before the current year. For example, in 2024 they will only accept corrections for 2017-2023 and not for 2015 or 2016.
This new development adds an inferred deadline for submitting your corrections which should add some urgency on your part for submitting your corrected filings as quickly as you can. If this new rule has you concerned, we are here to help. Equifax can help you handle your original filings for ALL years in the past. So, if you find that you have neglected to adhere to ACA reporting requirements for prior years, we can help. Learn how we can help you with this and other ACA management challenges.
On March 30, 2023, U.S. District Judge Reed O’Connor ruled that preventive care recommendations made by the U.S. Preventive Services Task Force (USPSTF) no longer needed to be covered nationwide by private health insurers at zero cost to patients.
This ruling applied specifically to preventive services recommended by the USPSTF with an “A” or “B” rating that were made after the ACA was enacted in 2010.
Some examples of the affected preventive screenings are:
A full list of the “A” and “B” rated USPSTF recommendations is available here.
On May 15, a federal appeals court put this ruling on hold, and on June 12, an agreement was made between the Biden administration and the businesses and individuals who sued to remove the preventive care mandate for a broad stay nationwide. This will temporarily keep the requirement for this preventive care to be covered throughout the appeal process.
This means that, for now, insurance plans must continue to offer no-cost coverage for the preventive services qualified above.
The Department of Health and Human Services (HHS) has filed a notice of appeal and, at the end of this process, Judge O’Connor’s ruling could potentially be overturned in the future or maintained. With this in mind, making significant benefit plan or pricing changes may be premature until this is resolved.
This litigation could raise the possibility that individual states could step in to enact their own preventive care requirements. If the federal mandates are eventually struck down and potential preventive care regulations are newly enacted at the state level, this could further complicate benefit administration for employers. As of Nov. 2023, the states with their own mandates include Massachusetts, California, New Jersey, Rhode Island, Vermont and Washington, D.C. To learn more about the mandates in these states and their reporting deadlines, read our article What Do Individual Healthcare Mandates Look Like in Your State?
For calendar year 2023, Forms 1094 and 1095 are required to be filed by Feb. 28, 2024, if filing on paper, or April 1, 2024, if filing electronically.
An ALE member offering fully-insured plans must furnish a Form 1095-C to each of its full-time employees by March 1, 2024, for the 2023 calendar year. In addition, employers offering self-insured plans must furnish a Form 1095-C to each of its full-time employees plus any other employee enrolled in the employer’s self-insured plans by March 1, 2024.
ACA open enrollment deadlines for 2024:
Dec. 15, 2023 for coverage to start January 1, 2024
Jan. 15, 2024—the last day to enroll in or change health plans for the year
Coverage starts on February 1, 2024, for those who enroll in or change plans between December 16, 2023, and January 15, 2024, and pay their first premium
After January 15, 2024, individuals may only enroll in or change plans if they qualify for a Special Enrollment Period.
As of November 21, 2023, approximately 4.6 million people have selected an ACA Health Insurance Marketplace plan since the 2024 Marketplace Open Enrollment Period opened on November 1. ALEs should consider encouraging non-benefits eligible employees to apply for coverage before the above deadlines.
To help get you started on the right foot going into 2023 ACA reporting, we have put together a short guide with tips to help you and your team be more effective and efficient. Along with including important deadlines, penalties, and regulations to know, we lay out our 5 Steps to Smoother 2023 ACA Reporting:
Verify Your Data Is Accurate and Up-To-Date
Calculate Codes and Validate Forms 1094-C and 1095-C
Stay on Top of IRS Filing Rules, Deadlines, and Penalties
Identify and Adhere to State Laws and Deadlines
Follow a Consistent and Repeatable Process
Dig into this eBook 5 Steps to Smoother 2023 ACA Reporting, for more in-depth information on how these steps can help you get and stay more organized throughout the season and beyond.
The information provided is intended as general guidance and is not intended to convey any tax, benefits, or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Equifax Workforce Solutions provides services that can help employers reduce their compliance risks. Details on our provision of these services and related support will be contained in your services agreement. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.