ACA Deadline Looms: Insurance Data Transmittal to IRS Due
Businesses face a very important deadline today and may face major penalties if they don’t hear back from the IRS.
Today marks a very important deadline for employers in regards to the Affordable Care Act. If employers do not get a response back from the IRS about their transmittals by June 30, they may be responsible for large fines and penalties. This is applicable to US employers with over 50 full-time employees. With the volume of files going into the IRS, it may take several days to send a response back to the employer.
This transmittal process is what the IRS uses to ensure eligible employees are receiving the affordable medical plan that they’re entitled to under the act. Companies track employees’ hours, and employees are eligible for benefits, like an affordable medical plan, if they work more than 30 hours a week. Companies report that information to the employees themselves and then transmit the data to the IRS, which checks for errors. A company will be penalized for each employee it should have offered an affordable medical plan to but did not.
The challenge with this process is awareness. Many companies did not know this was coming or they weren’t prepared for the complexity of the process, said Jon Shanahan president and CEO of Businessolver Inc., a company whose core business is to manage eligibility data.
“It’s most likely not a process most employers would want to do or could do themselves from a technical perspective,” he said.
What businesses should be aware of is that they can be eligible for an extension — as long as they made their best efforts to clean up data sent to the IRS. Companies will have 30 days to correct any errors. If the IRS rejects data files completely, companies have 60 days to scrub the data and refile.
Finally, if a company can prove they’ve been looking for an outside vendor or if it hired an outside vendor and the vendor pulled out, the company can file for a short extension with the IRS, said Angel Hower, the ACA product owner at Businessolver.
For companies unable to get an extension, the solution is simple.
“The remedy is: If someone doesn’t make this deadline, they still need to file, and they need to file as soon as possible,” Hower said. “The longer you wait, the bigger red flag that will raise with the IRS.”
This story was updated on June 30, 2016, at 1:55 PM.