Preparing Affordable Care Act (ACA) Forms can be difficult, but we are here to simplify things! We have compiled this list to help ensure that you don’t make these common ACA Form errors.
To reduce ACA form errors, it is important to know what these form types are, their differences, and how they are used.
What is Form 1095-B?
Form 1095-B, Health Coverage, is used to report information regarding individuals who are covered by minimum essential coverage (MEC) to the IRS. Eligibility for certain types of coverage can affect a taxpayer’s eligibility for the premium tax credit.
This type of filing is typically completed by insurance companies and other coverage providers, such as small employers.
What is Form 1095-C?
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is used to report information regarding health coverage offered by an employer for each employee to both the IRS and those employees.
For employers, this form combined with Form 1094-C is used to determine whether an Applicable Large Employer (ALE) owes an employer shared responsibility provision (ESRP) payment under IRS section 4980H. For employees, this form is used in determining eligibility for the premium tax credit.
How are Forms 1095-B and 1095-C different?
The main difference between these form types is that they are provided by different entities and to different groups of people.
Form 1095-B is primarily provided by insurance companies and other coverage providers, such as small employers. Those who are enrolled in coverage outside of the Marketplace should receive this form, except for employees of ALEs that offer self-insured coverage.
Form 1095-C is typically issued by ALEs to their eligible full-time employees, and other employees (such as part-time employees) who were enrolled in the offered insurance. Individuals that are employed by ALEs that offer self-insured coverage should receive this form.
How are Forms 1095-B and 1095-C similar?
These forms both provide individuals with information regarding health coverage during the prior year.
They provide the IRS with specific coverage information such as if an individual was enrolled in coverage and for which months.
Most Common ACA Form Errors
Maybe, you have already collected all of the information for the filer and for your recipients and you are ready to complete and file your ACA forms.
However, before you press that e-file button or print off your forms, take a moment to review your information and forms for accuracy in order to avoid these ACA form errors that may result in potential penalties or other problems.
When completing your forms, ensure that you don’t make these ACA form errors:
Using the Wrong Type of Form
It is extremely important to know the difference between the different types of ACA forms and using the correct type. As stated above, these forms are provided by different entities and to different groups of people:
- If you are an insurance company or other coverage provider, such a small employer, then you should complete a Form 1095-B filing.
- If you are an ALE, or Member of an Aggregate ALE Group, then you should complete a Form 1095-C filing.
Not Using Approved Forms
If submitting a paper filing, both Forms 1095-B and 1095-C can be printed on regular printer paper, in landscape format, and special forms do not need to be ordered. It is important to note that although you are not required to order special forms, you must use IRS approved form types. Only forms that conform to the official form and the specifications in Pub. 5223 are acceptable for filing with the IRS.
Using the Wrong Year for the Forms
ACA Forms are year specific, which means that the tax year can be found on the form itself. As with all tax reporting forms, you should make sure you are completing your ACA forms for the correct tax year.
For Forms 1095-B, this would be the year in which the recipients, or responsible individuals, were enrolled in coverage; NOT the year in which you are preparing the forms.
For Forms 1095-C, this would be the year in which the recipients, or employees, were offered coverage; NOT the year in which you are preparing the forms.
Failing to Include a Transmittal Form
When submitting a paper filing, you must always include a transmittal, or summary form.
- The summary form for Forms 1095-B is Form 1094-B.
- The summary form for Forms 1095-C is Form 1094-C.
When submitting an electronic filing, you must include the same information that is on these summary forms, but it is submitted in a different format.
Providing an Incorrect Tax Identification Number
One of the most common types of ACA form errors are TIN validation errors. This will happen when the last name and SSN (or other TIN) submitted in your filing does not match what the IRS has on file. This can happen for a variety of reasons, including:
- A maiden name was used when married name is registered with the SSA (or vice-versa).
- A Hispanic last name was used where 2 last names are common. In this case, the first last name listed in the last name field must be the one registered with the SSA.
- There is a typo in the last name or SSN field.
If you provide invalid TIN information in your filing, then you may receive notices and/or penalties from the IRS. The best fix for TIN validation issues is to catch them before you submit your filings to the IRS.
We strongly recommend verifying the TINs of all new employees and re-verifying existing employee’s TINs annually to catch any changes or updates. You can utilize tools like TINCorrect to double-check that the information provided for both the payer and payee is corroborated with the IRS.
Making General ACA Form Errors
Completing a filing on your own could result in simple ACA form errors, such as ink that is too light, inserting font that is too small or too large, or misformatting data. These ACA form errors are extremely common. We recommend using an authorized ACA filing software, such as BoomTax, to help avoid or minimize these simple errors.
After you’ve checked your filings for these common ACA form errors, you should be good to submit your filing to the IRS and any applicable states.
Once you’ve submitted your filing(s) to the IRS, either electronically or via mail, and have received an “Accepted” status, then your filing obligation should be satisfied.
If you’d like a full breakdown of Form 1095-B, then take a look at our article, Mastering Form 1095-B. Or, if you’d like more information on Form 1095-C, then review our article, Form 1095-C: The Essential Guide.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.