IRS to Require Small Employers to E-File

Background:

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to file 1094-C/1095-C forms with the IRS and requires small non-ALEs with self-funded plans to file 1094-B/1095-B forms with the IRS. Smaller employers have long been able to submit those via paper when issuing fewer than 250 of one specific form, but that changes starting with 2023 returns submitted in 2024.

Which Employers Are Affected?

Employers who file 10 or more return types in aggregate (including but not limited to forms W-2, 1099, and 1094/1095).

What’s Changing?

For IRS forms filed in 2024, final regulations now require e-filing when the employer is submitting 10 or more forms in a calendar year, and that’s a combined count of numerous types of returns to be filed This will include corrected forms submitted later as well. This means that smaller employers who were filing 1094/1095 forms by mail in previous years must prepare to file electronically in 2024, assuming these employers meet the 10-return threshold.

Comment: If your employer has already been filing electronically, continue to do so. These employers won’t need to make any changes to its filing process.

What Do Employers Need to Do?

Since a combined count of 10 forms for the year triggers the e-filing requirement, most employers will be subject to electronic filing starting in 2024.

Current paper filers should prepare for the conversion to e-filing.  The IRS has developed an intake portal called AIR (ACA Information Returns) which requires registration, downloading an XML schema, populating your data into that schema, running tests to ensure it will upload, understanding and troubleshooting error codes, and more.  This process can be tedious and take weeks to setup.

For employers that need assistance with electronic filing of the 1094/1095 forms, please contact your broker representative.

There are ACA reporting partners that will assist with electronic filing to avoid the burden of filing directly using the IRS AIR platform.  We would encourage you to work with your IMA account team to identify which pathway would work best with your budget.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.