This blog was last updated on June 27, 2021
Tax information reporting under the Affordable Care Act (ACA) requires that insurance providers and large employers with 50 or more full-time employees report to the IRS on their health coverage offerings for their members and employees. Some of these companies are experiencing confusion regarding when reporting is necessary – and many are scrambling to determine which internal department will be tasked with ACA reporting.
This bewilderment stems from the multiple departments that will need to play a role in the ACA reporting process:
- Human resources: This department typically serves as the vehicle for employees to enroll in coverage, and it has the necessary records of employees who are covered by an employer-sponsored health plan. As such, it is understandable that human resources would be thought as the responsible department for ACA reporting.
- Financial Operations / Accounting: Given that this is a tax reporting matter, some employers would immediately look to their accounting and financial operations departments. As sections 6055 and 6056 of the Internal Revenue Code (IRC) dictate the terms of ACA reporting, the responsibility is largely a compliance issue, thereby suggesting that a company’s accounting and financial operations teams must ensure that all obligations are met.
- Information technology: Although the IT department won’t necessarily be completing any paperwork, there is an information security component of ACA reporting. As data is sent to both the IRS and enrolled employees, systems must be in place to protect that information.
- Member services: Not only are companies confused about their new tax compliance obligations, but their members and employees will also have questions about what is required. Many will first turn to their insurance provider, meaning that the insurer’s member services department will be the first point of contact for many enrolled individuals.
Outsourcing for ACA reporting
Instead of tasking their internal departments with new operational demands, some organizations may turn to a third-party vendor for tax reporting services. Relying on the experience of a third-party vendor would allow organizations to remain compliant with the new reporting requirements while enabling them to focus their energy on other business-critical priorities.
Check out our education section for more about ACA reporting requirements for large employers, insurance providers and self-insured employers.
