Your biggest new ACA compliance challenge is – a piece of paper?

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Author and educator, Booker T. Washington, once said, "Success is to be measured by the obstacles you have to overcome." His observation is right on the money when you consider that some of the most daunting obstacles facing businesses involve regulatory compliance.

For example, new rules, regulations, and forms have made the Affordable Care Act (ACA) one of the biggest challenges for U.S. businesses with 50 or more full-time/full-time-equivalent employees. And this year, the compliance burden for these "applicable large employers" (aka "ALEs") is about to get a lot tougher with the debut of a new ACA-related form – the 1095-C.

For many organizations, introducing anything new can be troublesome. However, the first year of a new compliance process – one like Form 1095-C that involves you and your employees – can be downright disruptive. Chances are your employees will be looking for guidance about this new form, from which they may need information to complete their income tax return. You have to be ready to respond to employees' questions. So today we're going to provide some basic things employers and employees both need to know about Form 1095-C compliance.

What is it?

Starting in 2016 (for the 2015 tax year), the ACA is requiring organizations that employ 50 or more full-time/full-time-equivalent employees to offer their FT/FTEs ACA-compliant health care coverage or pay a penalty. Employers will use Form 1095-C to convey specific information about the health care coverage they offer to each employee and (if it applies) to his or her dependents. Form 1095-C documents to the government that an employer has complied.

What does all this mean for employers?

You have to gather reporting information and complete a Form 1095-C for each employee, file it with the Internal Revenue Service (IRS), and then distribute copies to your employees, just as you would a Form W-2. The IRS needs their copies for 2015 by February 28, 2016 (March 31st, if filing electronically). Employees must receive their personal copies by January 31st. Since that falls on a weekend in 2016, you have until February 1st.

How does Form 1095-C affect employees?

If applicable, they will receive Form 1095-C from you on or about February 1, 2016. (Employers meet the requirement if the forms are properly addressed and mailed on or before the due date.) Only employees who were full-time for one or more months during 2015 will receive a Form 1095-C. If an employee worked part-time for all of 2015, they will not receive a Form 1095-C.

Where there is a compliance need, help is available from ADP®.

Since ACA requirements began in 2010, ADP has helped reduce the stress level for organizations, when it comes to health care compliance. ADP is now providing Form 1095-C reporting for our ADP Health Compliance, ADP TotalSource®, and ADP Workforce Now® with Essential ACA clients. We will prepare and file their forms with the IRS for them – and provide completed 1095-Cs either directly to each employee, or to employers for distribution to their employees. This year, we will prepare and distribute millions of Forms 1095-C for our clients.

We have prepared some helpful support pages for both employers and employees that provide general information about Form 1095-C. Just click on the links.

And stay tuned for a follow-up blog that will focus on best practices for educating your employees and communicating Form 1095-C action items that they need to know.