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The ACA Blindspot – Many Employers Caught Off Guard Because of Inaccurate Advice

September 26, 2018


The employer reporting requirements of the Affordable Care Act (ACA) are now almost four years old. For many, it has been an arduous process each year to comply with the rules laid out in the 2010 law but only recently enforced. For others, the right technology along with a couple of years of experience has turned the ACA reporting into a routine annual exercise.

The answer to the ACA is in the totality of the data and how it is reported to the IRS. The data needed for reporting accurately was either there or it was not. Only now after three full years (2015, 2016 and 2017) of ACA reporting are we learning if employers and their partners understood the nuances and ramifications of the rules and regulations. It is clear now that some lacked even a basic understanding.

What has emerged in the last few months is the result of two major blind spots that occurred in the first few years of reporting and may still exist today. These blind spots have generated countless IRS penalty letters and significant potential penalties to employers across the country. Nearly all of the new customers that are asking us to assist with their ACA reporting have had one of the following two issues:

  1. A payroll vendor offered to provide ACA reporting to an existing client, but the payroll company did not realize it may not store all the proper data needed to complete all the requirements and underestimated how complicated the Forms 1094-C and 1095-C were to complete accurately. This frequently led to incomplete and/or inaccurate Forms being submitted to the IRS which has now resulted in the employer receiving a Letter 226J proposing a penalty. Often times in the scenarios we have seen if the Forms 1094-C and 1095-C would have been completed accurately the first time, the employer could have avoided the Letter 226J.

  2. The second common scenario is occurring with fully insured employers who were under the impression or were advised that an insurance carrier would provide ACA reporting on their behalf using the Forms 1094-B and 1095-B. Whoever was providing this advice lacked a basic understanding of the ACA as this is a position that is clearly not supported by the rules and regulations. These employers are now receiving a Letter 5699 from the IRS inquiring where their Forms 1094-C and 1095-C are for past reporting years. Employers receiving the Letter 5699 could be subject to the penalty amounts under Internal Revenue Code section 6721 ($250 per Form 1095-C or more depending on the year in question) and IRC section 6722 (a separate $250 per Form 1095-C or more depending on the year in question) in addition to any penalty assessed under the employer mandate provision of the ACA.

It is impossible to turn back the clock or ask for a do over, but getting it right the first time moving forward is of the utmost importance. Accord has tools that insure accurate, timely reporting. Whether you are an employer, broker, or payroll company we encourage you to look at Accord as your ACA technology partner. We have been focused on reporting accurately from day one and to date have filed millions of Forms 1095-C without a single client receiving a Letter 226J or Letter 5699. If you would like to discuss how Accord can assist you, please contact us.


About the authors

Steve Helsing serves as COO of Accord Systems, LLC and brings more than 30 years of experience in the employee benefits industry, primarily focused on start-up and turnaround roles for the organizations he has served. Steve spent more than 11 years with Seabury & Smith (a division of Marsh & McLennan) in consulting and senior management roles. In 1997, he joined Employease as VP of Sales to help launch the first internet based benefits administration and HR system. In 2000, he began consulting with organizations on the integration of online enrollment strategies and voluntary/worksite benefits enrollment, his work eventually led to the formation of Tricerion Group in 2007. With rapid growth over 3 years, Tricerion Group was acquired by USI in 2011. Steve also co-founded Centerian, focused on delivering payment solutions to the insurance industry. Steve is focused on organizational structure, operations and development at Accord.

Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorneys P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.


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