ACA Reporting for 2018: What's Changed?

 November 20 2018     Avery Ozimek

It’s again time for applicable large employers (ALEs) and employers who sponsor self-funded group health plans to prepare for reporting requirements under the Affordable Care Act (ACA).  For 2018, very little has changed from 2017. However small the change though, it is still important to understand the changes to properly comply and avoid penalties. (I know many employers are still hoping that ACA reporting will go away.)

Goodbye, good faith

This year it becomes especially important to understand changes and report correctly because the IRS has ended (and is not expected to extend) its good faith leniency for employers. In the past, if employers could prove a good faith effort in complying with the ACA’s requirements when filing, no penalty was imposed for incorrect or incomplete forms as long as the filing was submitted timely, and the employer could later file corrected forms. This is set to change for 2018.

Unlike in the past, beginning in 2019 and related to the 2018 reporting year, employers may now be penalized for noncompliance with filing requirements regardless of their good faith efforts. Therefore, all requirements, including timeliness and completion, must be followed. The instructions for Forms 1094-C and 1095-C state that employers who “fail to comply with the applicable information reporting requirements may be subject to the general reporting penalty provisions for failure to file correct information returns and failure to furnish correct individual statements.” The penalty for an employer’s failure to file a correct information return for 2018 is $270 per return for which a failure occurs (cap of $3,275,500). (Remember that many errors made on the informational return are often duplicated on individual statements which doubles the penalty.)

While penalties may be imposed for incorrect information, Line 15 of the 1095-C form is one exception. De minimis errors on Line 15 will have continued relief. Line 15 is the reported cost of coverage. The safe harbor for de minimis errors generally applies if no single error differs from the correct amount by more than $100.

Sections 4980H(a) and 4980H(b) Penalties

As a reminder, there are two types of penalties related to reporting requirements under the ACA. Per Section 4980H(a), the “A penalty” is imposed when an ALE fails to offer Minimum Essential Coverage to at least 95% of its full-time employees. Per Section 4980H(b), the “B penalty” is imposed when an ALE fails to offer coverage that is either affordable or does not provide plan benefits equal to or better than the minimum value of 60 percent.  Both penalties have increased for 2018. The A penalty increased from $2,260 to $2,320 for 2018, and the B penalty increased from $3,390 to $3,480 for 2018.


  • It is especially important this year that employers distribute their employees’ 1095-C forms by January 31, 2019, as required. Employees use this form to verify their coverage when filing their individual taxes. For 2018, individuals must indicate their health coverage status, or the IRS will not accept the tax return.
  • Under the employer mandate, if healthcare offered by an employer is not affordable and does not meet minimum value, the B penalty (referenced above) may apply. Per the IRS, an offer of coverage “is considered affordable for an employee if the employee required contribution is no more than 9.5 percent (as adjusted) of that employee’s household income.” For 2018, the threshold is 9.56 percent. The threshold has stayed between 9.5 and 9.7 percent since 2015, however, in 2019 it will increase to 9.86 percent.
  • The IRS reiterates that there is no code for Line 16 on Form 1095-C to indicate that an individual waived coverage.
  • For now, the “plan start month” box remines optional on Form 1095-C. However, this does not mean that the box will remain optional in 2019. 

Final forms are available from the IRS – ALE’s use Forms 1094-C , 1095-C and related instructions, while self-funded plan sponsors under 50 full-time equivalent employees use Forms 1094-B, 1095-B, and related instructions.  With the importance of accurate and timely filings this year, employers should be mindful of the filing deadlines. As a reminder, Form 1095-C (or 1095-B if applicable) is due to employees by January 31, 2019. Forms 1094-C and 1095-C (or 1094-B and 1095-B if applicable) are due to the IRS by February 28, 2019 if paper filing, or April 1, 2019 if electronic filing.  Paper filing is only available for employers with fewer than 250 returns.

Please contact your HORAN representative with any questions.