Attention: ACA Deadline Extended

December 14, 2019

The IRS extended the ACA deadline for reporting to employees. Here is more information about the ACA and what the extension entails.

Photo of an hourglass sitting on a computer representing a deadline extension.

In the payroll and taxes world, it seems like there isn’t always a lot of good news to report.  However, last week the IRS announced that they have extended the deadline for certain ACA reporting documents.  As you can imagine, extending any IRS deadline is good news.  So, there’s a little gift to you from the IRS.

In the meantime, here is a debriefing about the ACA and what is going on with the deadline.

What is the ACA?

It’s important to know more about the ACA before we can dive into the ACA deadline. As we’ve previously discussed, ACA is the acronym for the healthcare reform law called the Affordable Care Act.  Others still refer to the reform law as Obamacare.  The program has evolved through government administrations, but there are basically three goals of the act.  First, the government aims to provide an affordable healthcare option to more people.  Second, they wish to expand Medicare programs to cover those at or below the poverty line.  Third, they hope to lower overall healthcare costs by supporting specific medical methods. So, to accomplish all of this, the process needs to be closely monitored. Furthermore, the IRS requires companies to prove their compliance with the ACA and to meet the deadlines for reporting and filing.

Who does the ACA deadline impact?

Now, not every person or company is necessarily impacted by the news of the ACA deadline extension.  Applicable Large Employers (ALEs) and self-insured employers are those who will be most affected by this deadline change.  This is because only those with 50 or more full-time (or full-time equivalent) employees are bound by the mandates of the ACA.  The IRS defines full-time employees as those who average at least 30 hours of work weekly, or 130 hours of work monthly. 

Related:  SPECIAL BLOG: New 2018 Tax Withholding Table & 2018 W4

What are the ACA reporting forms?

Image of a stack of forms.

So, the IRS requires companies to report duly to the IRS and to employees.  When they file to the IRS, they transmit forms 1094-B (non-ALEs) and 1094-C (ALEs).  Accordingly, when they report to employees, companies must send a 1095-B (non-ALEs) or a 1095-C (ALEs). A company’s size (number of full-time employees) determines whether a business is n ALE, and therefore the resulting ACA deadlines.

What is the ACA deadline extension?

Finally, here’s the information you came for.  The original ACA deadline for reporting ACA documents to employees was January 31, 2020.  However, the IRS bumped the date so that the new deadline is 30 days later.  Therefore, employers must send forms 1095-B and 1095-C to employees by March 2, 2019.  This means that employers must make sure to postmark the envelopes by that date.  While extending the deadline 30 days might not seem like a lot more time, it’s a pretty big deal when you consider that the original deadline was just after the start of the new year.  Certainly, we all know how hectic the beginning of each year can be.

Conversely, it is important to be aware that the original deadlines for filing the ACA forms with the IRS are the same. 

What happens if I miss the deadline?

Ok, so here’s the important part about the ACA deadline.  Remember, the IRS does not establish deadlines as a mere suggestion.  In fact, they mean business when they tell you something is due.  So, make sure that you adhere to the date, because there will be penalties for late reporting.

Thanks, IRS.  What’s next?

To wrap this up, you now have until March 2nd to send out forms 1095-B and 1095-C to employees to comply with the ACA deadline.  So, while writing a thank-you note to the IRS is not mandatory, at least you can appreciate that you now have a few extra minutes to exhale after the holidays.  Well, that is until you need to start sending out W-2s to your employees.  So, be sure to write all your ACA deadlines (and otherwise) on your to-do list before you indulge in your next glass of eggnog.  Cheers!

Photo of eggnog and candy cane.
Photo by Ylanite Koppens | Source

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