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Affordable Care Act Reporting May be a Pain, but There's a Cure

Health Care

The employer shared responsibility (ESR) provisions of the Affordable Care Act (ACA), sometimes referred to as Obamacare, require Applicable Large Employers to report their full-time equivalent employee count and associated coverage situation. As many businesses can attest, it's challenging to pull together all the necessary information regarding insurance services, benefits, and payroll. Then you have to figure out how to fill out Forms 1094-C and 1095-C.

Reporting Basics

To meet the ESR provisions for 2017, applicable large employers (ALEs) — those with 50 or more full-time employees, including full-time equivalent employees (FTEs) — you must have offered affordable, adequate coverage to at least 95 percent of your full-time employees and their dependents in 2016.

Then you'll need to provide that information to the IRS on Forms 1094-C and 1095-C including:

  • Number of full-time employees
  • Your offers of coverage and the cost of that coverage

Failure to meet the provisions opens your business to the possibility of potentially steep penalties.

The Challenges

The IRS forms are complex. For starters, you have to figure out which employees should be given Form 1095-C. Then, you’ll need to answer difficult questions, such as: What if an employee didn’t work full-time all year? What if I made an offer to an employee, but they chose not to enroll?

Guidance from the IRS on this issue may also be difficult to follow, or simply difficult to finish reading. For example, the instructions for both forms are 12,844 words long. That's almost three times as long as the U.S. Constitution. For many people, though, the main challenge relates to lines 14 through 16 of Form 1095-C. Remember, you'll need to fill one of these out for each full-time employee.

What's Coming

The safe harbors to determine affordable coverage were adjusted to a higher rate this year. The penalties for not complying also received an adjustment for inflation.

What Can You Do?

Reporting is difficult, and it can be costly. Having an integrated software solution that combines benefits, payroll, and insurance data can take much of the burden off your shoulders at reporting time.

An integrated solution, like the Paychex Employer Shared Responsibility Services, monitors your ALE status, your FTE hours, your coverage offers, and the affordability of your offered coverage*, throughout the year. You'll receive notifications if you're in danger of not meeting the provisions or for other relevant changes.

When it's time to report, the Paychex solutions for health care reform may help you with end-of-year reporting including the infamous lines 14, 15, and 16 for each employee.

When researching solutions for your ACA reporting, make sure that the provider you choose can help with each aspect of the ESR provisions as well as offer professional support.


*The Coverage Adequacy Service is available only to payroll clients who receive their health and benefits (H&B) coverage through Paychex Insurance Agency or the Paychex PEO.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.