The Affordable Care Act (ACA) safe harbors, in the context of employer-sponsored health coverage, refer to certain provisions that provide protection or relief to employers from potential penalties or requirements under the ACA. These safe harbors are designed to simplify compliance and alleviate some of the challenges that employers may face in meeting specific ACA requirements. Here are some common ACA safe harbors:
- Minimum Essential Coverage (MEC) Safe Harbor:
- Employers can use various safe harbor methods to determine whether the health coverage they offer to employees meets the minimum essential coverage requirements. These safe harbors help employers avoid penalties associated with not offering MEC.
- Affordability Safe Harbors:
- The ACA imposes penalties on applicable large employers (ALEs) if the health coverage they offer is not considered affordable for their full-time employees. Safe harbors provide alternative methods for employers to determine affordability, such as using the W-2 wages, rate of pay, or the federal poverty level.
- Waiting Period Safe Harbor:
- The ACA limits the waiting period for health coverage to 90 days. Employers can use a safe harbor to determine when a waiting period begins, especially in situations where it may be challenging to precisely determine the start date.
- Dependent Coverage Safe Harbor:
- ALEs are required to offer coverage to the dependents of full-time employees. Safe harbors can be used to determine which dependents must be offered coverage and to establish compliance with this requirement.
- Form 1095-C Safe Harbor:
- Employers are required to provide employees with Form 1095-C, which reports information about the health coverage offered. Safe harbors provide simplified methods for completing certain parts of Form 1095-C.
- Applicable Large Employer Determination Safe Harbor:
- Some employers may be close to the threshold for being classified as an applicable large employer. Safe harbors provide alternative methods for determining ALE status, taking into account factors such as seasonal employees.
It’s important to note that the availability and specifics of safe harbors may change over time, and employers should always refer to the most current IRS guidance for accurate information. Safe harbors are intended to facilitate compliance with the ACA’s complex provisions and offer flexibility to employers in meeting their obligations. Employers should carefully evaluate their specific situations and consult with tax and legal professionals to ensure compliance with ACA requirements.
Were there any changes made to the ACA Reporting Requirements
for 2023 Tax Year?
The IRS did not release any major changes to the ACA forms or codes in their September 27,2023 release of the draft instructions of the ACA forms for the 2023 reporting year. They did, however, change the affordability percentage to 9.12% and reduced the e-filing threshold to 10 returns. This means that you must e-file if you are filing 10 or more returns. It is also important to note that the IRS increased the penalty amount for health coverage providers and employers who do not complete their ACA reporting on time. These penalties can be extremely costly and range from $50-$530 per form!
Avoid Penalties and complete your filing with ACA Track! Request a quote today for your 2023 filing.