Retain Your ACA Records

Even though the Affordable Care Act (“ACA”) employer reporting deadlines for tax year 2018 are behind us, the work with the ACA never stops.  Several years into the reporting process, the IRS is still reviewing employer submissions from 2015 and 2016, and is still sending 226J penalty letters.  Employers can receive a penalty letter if their submission to the IRS shows (a) a less than 95% offer of coverage rate, or (b) that a specific employee was not offered compliant coverage.  Penalties can be quite steep, often reaching into the six- and seven-figure ranges for even moderately-sized employers.  If an employer feels they did comply with the law and the penalty is incorrect, that employer must then gather data and promptly respond to the IRS with information showing why the penalty amount is not owed. 

Employers need to keep records throughout the year showing employee health insurance eligibility and all offers of coverage made to employees.  Employee tracking and recordkeeping for ACA purposes can be done very efficiently through software.  Tracking software could be in a stand-alone format, or in a package that includes reporting capabilities.  Whether or not an employer works with an ACA software vendor, be sure this information is retained:

·         All forms 1094-C and 1095-C for previous reporting years

·         Communications to employees showing when and to whom a qualifying offer of coverage was made

·         Employee waivers of coverage

·         Confirmation of enrollment from health insurers

·         Premium and employee wage data (to determine affordability)

·         Hours of service data for employees, including use of monthly measurement method and look-back measurement method, and number of full-time employees and equivalents per month

·         Monthly data showing the employer satisfied the 95% offer of coverage test for each month (70% offer of coverage test for tax year 2015 only)

·         Questionnaires and initial setup data from ACA software vendor(s)

It’s also very important to be able to keep and store your data if you change vendors. 

Contact myHRcounsel for questions relating to the ACA.  Our partner, SyncStream Solutions, LLC (, also offers a full range of ACA tracking and reporting software solutions for employers. 

 Written by Mikel Johnson