ACA Reporting Update: IRS 1095 Draft Instructions for 2024

Over the summer, the IRS introduced draft versions of the 1095 forms for the upcoming year, 2024. And now, they’ve followed up with freshly drafted instructions for the same year. 

While these instructions aren’t the final ones that employers will use in 2024 when they tackle their Affordable Care Act (ACA) reporting for the 2023 tax year, they offer valuable insights into potential updates on the horizon.

Typically, as deadlines draw near, the IRS finalizes the drafts of Form 1095-B and 1095-C as well as their filing instructions. Until then, we can anticipate the finalized instructions in the coming months. 

Meanwhile, here’s a helpful overview of the drafted instructions and potential changes that might impact your business’s ACA reporting in the new year. 

Form 1095-B vs. 1095-C: Filing Requirements

Before we begin discussing the instruction, it’s essential to grasp the distinctions between forms 1095-B and 1095-C. Determining which form your organization should file dictates which set of draft instructions will apply.

Form 1095-B is primarily used by health insurance providers to furnish the IRS with comprehensive details about the coverage they provide and the individuals enrolled in this coverage for the tax year. Employers offering self-funded or self-insured health insurance to eligible employees must also file this form.

On the other hand, Form 1095-C is tailored specifically for Applicable Large Employers (ALEs). The IRS defines ALEs as employers with 50 or more full-time or full-time equivalent employees. These entities are legally obligated to provide eligible employees with health insurance coverage meeting the minimum essential coverage (MEC) and affordability requirements stipulated by the Affordable Care Act (ACA).

Are there any Changes to the 1095-B/1095-C Drafts? 

If you’ve been managing your organization’s ACA reporting in previous tax years, here’s the good news: there aren’t any significant changes in the process for completing Forms 1095-B or 1095-C. The primary alteration introduced by the IRS for the upcoming reporting season pertains to how you file these forms.

So, what does this mean? Essentially, the IRS has overhauled the e-filing thresholds, which will take effect at the onset of the 2024 calendar year.

What About the New E-filing Threshold for 2024?

In the past, specifically for the 2023 calendar year and earlier, businesses were allowed to file up to 250 paper forms with the IRS. This was a cumulative limit, implying that a business could file up to 249 paper W-2 returns and 249 paper 1095 returns without incurring penalties. However, this rule no longer holds.

Starting from January 1, 2024, businesses can only submit a maximum of 10 paper copies of information returns. This marks a substantial reduction, especially considering that this is no longer a collective number for various forms. For instance, if a business files 9 W-2s, it must e-file all other information returns for the remainder of the calendar year, regardless of the form type.

Failing to adhere to the new requirements for e-filing ACA 1095-c & 1095-b forms can lead to unwanted IRS acs penalties, but the team at TaxBandits is here to offer a streamlined filing option!

TaxBandits has an Easy Solution for ACA 1095 E-filing!

You may be familiar with our e-filing solutions for 1099 and W-2, and our quarterly and annual 94x filing, but did you know that we can help you maintain your IRS compliance when it comes to ACA reporting as well?!

It’s true! TaxBandits supports Forms 1095-B and 1095-C as well as their transmittal Forms 1094-B and 1094-C. You can easily upload your form information in bulk to generate 1095 forms and assign a single 1094 form as the authoritative transmittal per IRS requirements. 

As always, TaxBandits checks your forms using the IRS Business Rules to help ensure their accuracy. We support both federal filing and filing with the states that require ACA reporting. We also offer you options for distributing copies of 1095s to your recipients and/ or employees. You can choose to distribute paper copies  by mail, or grant your recipients access to digital copies via Online Access. 

Ready to create your free TaxBandits account and filing your year-end tax forms with the IRS, SSA, and state(s)?  

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