What key data should employers track to avoid errors on ACA forms?

Employers must accurately track employee hours, hire and termination dates, coverage offers, waivers, and insurance status. This data is crucial to correctly complete Forms 1094-C and 1095-C and ensure compliance with ACA requirements.

How does ACA-Track help employers prepare error-free ACA filings?

ACA-Track integrates with payroll and HR systems to collect employee data, provides a customizable dashboard for easy review, performs line code audits, and generates IRS-compliant electronic filings. The platform’s support team also assists with error correction and audit readiness.

When are ACA forms due to employees and the IRS, and how can delays increase error risk?

Form 1095-C must be furnished to employees by January 31 and Forms 1094-C and 1095-C filed with the IRS by March 31. Delays can increase the risk of penalties and reduce time for correcting errors, so timely preparation and submission are critical.

What are the penalties for submitting incorrect or late ACA forms to the IRS?

Penalties range from $50 to $270 per return or statement, depending on how late the forms are filed. Penalties can quickly add up to hundreds of thousands of dollars for large employers. Accurate, timely filings help avoid these costly fines.

Can employers customize ACA-Track to fit their specific business needs?

Yes, ACA-Track offers flexible configuration options including measurement and stability periods, FTE calculations, waiver codes, and affordability percentages, allowing employers to tailor the system to their organizational requirements.

How to Avoid Errors When Submitting ACA Forms to the IRS

Submitting ACA forms to the IRS is a crucial step for employers classified as Applicable Large Employers (ALEs) under the Affordable Care Act (ACA). Errors in this process can lead to costly penalties, compliance headaches, and even IRS audits. Fortunately, with the right preparation, tools, and knowledge, employers can navigate this complex task confidently and accurately.

In this blog post, we’ll dive deep into best practices for avoiding errors in ACA reporting, the key data points you need to track, and how partnering with an expert solution like ACA-Track can simplify the entire process.

Understanding ACA Reporting: The Basics

Before exploring how to avoid errors, it’s essential to grasp what ACA reporting entails:

Who must file?
ALEs—generally, employers with 50 or more full-time or full-time equivalent employees—must file ACA forms.
What must be filed?
- Form 1095-C is provided to employees, detailing the health insurance coverage offered.
- Form 1094-C is the transmittal sent to the IRS summarizing the 1095-Cs.
Deadlines to keep in mind:
- Furnish Form 1095-C to employees by January 31 (extensions have applied in past years).
- File Form 1094-C and 1095-C with the IRS by March 31 electronically or by paper filing deadlines.

Understanding these responsibilities and deadlines is the first step in avoiding reporting errors.

Common Causes of Errors in ACA Form Submission

Despite knowing the basics, many employers face challenges due to:

Incomplete or Inaccurate Employee Data

Data needed for ACA reporting spans multiple departments: payroll, HR, benefits, and finance. Missing hire dates, inaccurate hours worked, or improper employee classifications can lead to errors.

Failing to Track Variable Hour or Part-Time Employees Correctly

Determining whether a variable hour employee averages 30 hours per week is critical. Without proper tracking, employees may be misclassified, increasing risk of penalties.

Misunderstanding Full-Time Equivalent (FTE) Calculations

Accurate aggregation of part-time employee hours to calculate FTEs is necessary to establish ALE status and coverage obligations.

Incorrect Use of ACA Codes on Forms

Form 1095-C requires using correct codes for offers of coverage, affordability, and employee status. Misuse of these codes can cause IRS rejections.

Technical Issues with Electronic Filing

Employers with 250+ employees must file electronically and comply with IRS AIR schema specifications. Formatting errors or not obtaining a Transmitter Control Code (TCC) timely can cause submissions to fail.

How to Avoid ACA Reporting Errors: Best Practices

Centralize and Integrate Data Collection

Collect all employee hours worked, including full-time, part-time, variable hour, paraprofessional, and substitute employees, from multiple systems such as:

Payroll software
Timekeeping systems
Manual timesheets
Employee mobile entries

Centralizing data ensures consistency and completeness.

Monitor Employee Eligibility Continuously

Set up monitoring to track employee eligibility status changes, waivers, leaves, and other events affecting ACA coverage requirements. Early alerts help address compliance before filing deadlines.

Use a Reliable ACA Compliance Solution

Manual tracking and reporting are prone to human error. Automated solutions like ACA-Track offer:

Seamless integration with payroll and HRIS systems
Customizable dashboards to view and filter employee ACA data
Monthly line code audits for Form 1095-C accuracy
Electronic XML file generation for IRS filing

This reduces errors, saves time, and ensures data accuracy.

Stay Up to Date on IRS Requirements and Deadlines

Regularly check IRS publications for updates on filing deadlines, schema changes, and penalty amounts. Be sure to apply for your Transmitter Control Code (TCC) at least 45 days before filing electronically.

Conduct Internal Reviews and Audits

Before submission:

Review all employee data for completeness and accuracy
Audit hours worked and classifications
Verify correct ACA codes on Forms 1095-C
Test file your data with IRS schema validation tools

Early detection of errors helps avoid costly penalties and IRS rejection.

Secure Your Data

Given the sensitive nature of ACA data, ensure your reporting system uses encryption, secure transfer protocols (HTTPS), and complies with data privacy regulations. ACA-Track’s cloud-based platform offers SOC 2 type 2 compliance and encrypts personal data to safeguard against breaches.

What Happens If You Make a Mistake?

The IRS can issue Letter 226-J detailing proposed penalties for ACA non-compliance. Penalties can reach hundreds of dollars per form, with maximum caps running into the hundreds of thousands depending on the size of your workforce and the nature of the error.

If you receive such a letter, it’s crucial to:

Review the alleged errors carefully
Gather documentation showing compliance efforts
Respond within the specified timeframe (typically 30 days)
Engage legal counsel or ACA compliance experts as needed

Proactively maintaining accurate records and using a trusted compliance solution reduces the risk of receiving penalty letters.

Why Choose ACA-Track for Your ACA Reporting?

Navigating ACA compliance is complex, but ACA-Track makes it simple by providing:

Comprehensive data collection from any payroll or timekeeping system
Monitoring tools with advanced alerts for employee eligibility and coverage issues
Accurate and efficient reporting with support for federal and state filings
Fix ACA reporting errors with dedicated Client Success Advisors who guide you every step of the way
Secure, cloud-based platform with proven industry certifications

With a flexible pricing plan tailored to your business size and needs, ACA-Track helps you file confidently and avoid costly mistakes.

Final Thoughts

Avoiding errors when submitting ACA forms to the IRS starts with understanding your responsibilities and tracking accurate employee data throughout the year. Using integrated, user-friendly technology and staying on top of IRS requirements minimizes risk and makes ACA compliance manageable.

For businesses looking for a trusted partner to streamline ACA compliance, reporting, and audits, consider the expert services of ACA-Track. Their proven solution empowers employers to collect, monitor, and report with confidence — ensuring you stay compliant and penalty-free.

Take control of your ACA compliance today. Visit ACA-Track to learn how their comprehensive solution can help your organization avoid costly errors and simplify your ACA reporting.