Since the Affordable Care Act went into effect, sorting out the associated reporting obligations has continued to confuse many filers. We’ll attempt to clarify some of the questions in the following post.

When it comes to understanding the reporting obligations associated with the ACA, knowing where the individual receives healthcare coverage is the first place you need to start.

There are really three options a person can obtain healthcare coverage from:

The ACA Marketplace – this requires Form 1095-A Health Insurance Marketplace Statement (6055) which is provided by Health Insurance Marketplace providers and reports details about enrolled marketplace participants to allow them to take the premium tax credit.

A private insurance company – this method uses form 1095-B Health Coverage (6055). It is provided by insurance companies and other coverage providers. Provided for most health insurance coverage including individual market coverage & insured coverage sponsored by employers.

An employer – healthcare coverage provided through an employer uses form 1095-C Employer-Provided Health Insurance Offer & Coverage (6056). It is provided by Applicable Large Employers (ALEs). This proves that an offer of MEC was provided to each applicable employee as required under section 4980H.

Penalties for ACA reporting non-compliance

IRC 6721 penalties are automatically generated annually for late filing, filing on incorrect formats, or filing incorrect information including incorrect name and taxpayer identification number (TIN) combinations. Expanded IRC 6721 & 6722 penalties are generally assessed during an audit. Penalties are applicable under IRC 6721 and 6722, effectively doubling the penalty.

It pays to understand how and where your healthcare coverage is coming from, which forms are required, and when reporting is due. This will help you avoid audits and costly penalties.