Most Frequently Asked Questions About 2023 ACA Reporting

Read this article before getting your 2023 ACA Reporting underway!

As we approach the ACA reporting season, our team is getting a variety of questions from our clients. These are some of the most common questions that businesses have about the ACA reporting process. 

Start off 2023 right by putting together a plan for your business’s ACA reporting requirements. Our team is here to help you, starting with this blog!

What are the differences between 1095-B and 1095-C?

Both these forms report information related to health insurance coverage, therefore, they are often confused with one another. Different organizations with different circumstances will file these forms differently. Here are a few examples. 

Applicable Large Employers (ALEs) offering fully insured or self-insured coverage will file Form 1095-C to report their health insurance information. 

Employers with less than 50 employees, but that offer employer-sponsored, self-insured health coverage should file Forms 1095-B. 

Government providers of health insurance coverage, insurance carriers, and other non-ALEs should file Form 1095-B. 

What is a Premium Tax Credit (PTC)? 

A premium tax credit is granted to eligible individuals and/or families to help them cover the cost of the health insurance coverage that they purchase through the Health Insurance Marketplace. 

If you offer health insurance coverage to your full-time employee, and they decline the coverage because purchasing a plan on the open market was more affordable, they receive a PTC. This situation can result in penalties for employers that are required to offer minimum essential coverage that is affordable. 

What is the “family glitch?”

The “family glitch” comes into play when an employer is providing minimum essential coverage to an employee and their family members. For these individuals, whether they are a spouse or adult dependents, the coverage may not be affordable compared to their income. 

If this is the case, the employee may decline the offer of coverage and instead purchase a plan from the healthcare exchange. 

However, the IRS recently released some new regulations to prevent this scenario. They are outlined in this IRS document.

Is the ACA Affordability rate being lowered? 

Yes, for the upcoming ACA 1095 reporting season in early 2023, the affordability rate is 9.61%. For the 2023 tax year, it has been lowered to 9.12%

While this may seem like just a few decimal points, this could cause notable changes to ACA reporting. It is also important to note that this is the lowest the affordability rate had dropped since 2015 when the Affordable Care Act was signed into existence. 

This also means that employers may need to lower the amount that their employees are required to pay into their coverage. Employers will need to review their health insurance coverage to verify that it is still affordable for all eligible employers using this updated rate. 

Does your organization need assistance with 1095 reporting for the upcoming tax year? ACAwise is here to help, with years of experience filing ACA forms with the IRS and the ability to deal with specific ACA scenarios, our team can help you adjust to these changes! 

We also offer a free tool to help you determine the affordability of the coverage you are offering!

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