On March 30, 2023, the U.S. District Court for the Northern District of Texas issued a ruling that affects portions of the Affordable Care Act’s (ACA) preventive care services requirement. The court issued a nationwide injunction that has already been appealed by President Joe Biden’s administration. The practical impact of the ruling remains to be seen. The court ruling does not affect requirements related to contraceptive coverage. 

As a reminder, the ACA requires most health plans to cover a set of preventive services without imposing cost-sharing requirements when the services are provided by in-network providers. Among these are evidence-based items or services that have, in effect, a rating of A or B in the current recommendations of the U.S. Preventive Services Task Force (USPSTF). 
The court previously ruled that preventive care coverage requirements based on an A or B rating by the USPSTF on or after March 23, 2010, violate the U.S. Constitution. Accordingly, the new ruling granted an injunction against the enforcement of those requirements and vacated all related agency actions.

The impact of the ruling on specific employer plans remains unclear. The ruling has already been appealed to a higher court and may be stayed while litigation is ongoing. Also, while plans may not be required to provide certain types of preventive care services without cost sharing, many plans are expected to continue to provide this coverage. States may also impose preventive care requirements on insured plans.

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ACA Reporting: Most Employers Must File Electronically Beginning in 2024 

The ACA created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees. Currently, any reporting entity that is required to file at least 250 individual statements under Sections 6055 or 6056 must file electronically. However, on Feb. 23, 2023, the IRS released a final rule implementing a law change by the Taxpayer First Act of 2019, which lowers the 250-return threshold for mandatory electronic reporting to 10 returns. This means most reporting entities will be required to complete their ACA reporting electronically starting in 2024.

Electronic Reporting Requirement
For returns that must be filed in 2023, any reporting entity that is required to file at least 250 individual statements under Sections 6055 or 6056 must file electronically. The 250-or-more requirement applies separately to each type of individual statement. Entities filing fewer than 250 returns during the calendar year may choose to file on paper but are allowed (and encouraged) to file electronically. Beginning in 2024, employers that file at least 10-returns during the calendar year must file their ACA returns electronically. Also, reporting entities must aggregate most information returns, such as Forms W-2, 1099, 1095, etc., to determine if they meet the 10- return threshold for mandatory electronic filing. 

Currently, electronic filing is done using the AIR Program. The IRS has provided a lot of guidance and information on electronic reporting under Section 6055 and Section 6056 through its AIR Program main page. However, this guidance is generally very technical and intended for software developers and other entities that plan on providing electronic reporting services. The IRS’s electronic filing guidance is not generally intended to be used by employers that are required to file under Section 6055 or Section 6056, but it can provide some useful information on standards and procedures for returns transmitted through the AIR Program.

Employers can request a hardship waiver from the electronic filing requirement by submitting Form 8508, Application for Waiver from Electronic Filing of Information Returns , to the IRS. Reporting entities are encouraged to submit Form 8508 at least 45 days before the due date of the returns, but no later than the due date of the returns. (The IRS does not process waiver requests until January 1 of the calendar year the returns are due.) Reporting entities cannot apply for a waiver for more than one tax year at a time and must reapply at the appropriate time for each year a waiver is required. Any approved waivers should be kept for the reporting entity’s records only. Without an approved waiver, a reporting entity that is required to file electronically but fails to do so may be subject to a penalty of up to $290 per return (as adjusted annually) unless it can establish reasonable cause.

Employer Takeaway
Employers should begin planning for filing electronically next year, if necessary. For assistance finding a vendor to assist with filing these required forms electronically, please contact your Higginbotham representative.

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Upcoming EEO-1 Reporting Deadlines

Under Title VII of the Civil Rights Act (Title VII), employers with 100 or more employees and certain federal contractors must submit a report about their workforces to the Equal Employment Opportunity Commission (EEOC) by March 31 every year. This report, known as the EEO-1 report, is a federally mandated survey that collects workforce data categorized by race, ethnicity, sex and job category. However, the collection of this data from 2022 has been delayed, and the portal for submitting EEO-1 reports will not even be opened before the usual deadline in 2023. Instead, the EEOC expects to open the portal for employers to begin entering 2022 EEO-1 information sometime in mid-July 2023. Based on the usual deadline and timelines of prior years, employers subject to EEO-1 reporting in 2023 may expect the deadline for 2022 submissions to be set for no later than mid-September 2023. 

As a reminder, the following entities are subject to EEO-1 reporting:

• A private employer that has 100 or more employees (with limited exceptions for schools and other organizations);
• A private employer with between 15 and 99 employees if it is part of a group of employers that legally constitutes a single enterprise that employs a total of 100 or more employees; and
• A federal contractor that has 50 or more employees, is either a prime contractor or first-tier subcontractor, and has a contract, subcontract or purchase order amounting to $50,000 or more.