For most of the 2015, everyone was busy gathering more and more information about the first ever Affordable Care Act reporting requirements that apply to the employers as well as insurance carriers. A lot has been said and written about the reporting requirements though, here we put some light on one of the options available for reporting- electronic filing.

AIR: The Successor

The Affordable Care Act Information Return System (AIR) has been developed by the IRS to facilitate the electronic filing. However, before the AIR, IRS had the FIRE System (Filing Information Returns Electronically) that can be referred as the predecessor of AIR.

Moving to the ACA’s filing requirements, it would be preferable to know that there is a striking similarity between the IRS forms for payroll reporting and ACA reporting. The Forms 1094-B and 1095-B, and 1094-C and 1095-C operate in the similar fashion as Forms W-2 and W-3 operate. For submitting the payroll information, IRS facilitated employers and employees to either file through IRS’ Business Services Online Program or the FIRE system as per the different forms’ requirements. Although, those who need to file 250 or more returns are required to file electronically mandatorily, yet those who have less than 250 returns, are also encouraged by IRS to file electronically.

Many expected IRS to expand this FIRE system to integrate the ACA reporting, but IRS in turn, developed a new system, the “AIR” specifically for reporting. It will accept only the Forms 1094-B, 1095-B, 1094-C and 1095-C.

Similar to the FIRE system, filers need to apply for Transmitter Control Code (TCC) using the ACA Application for TCC. Read Steps for filing electronically: What You Need to Do Before E-filing Your ACA Returns.

The process of submitting application for TCC starts with the identification of Responsible Officer and Contacts. IRS asks for personal and taxpayer data for authenticating identity of these individuals. The responsible official also needs to provide his/her Adjusted Gross Income (AGI) from 2015 tax filings.

Responsible official is the sole point of contact with IRS and holds the responsibility and authority over the electronic filing of information returns on behalf of the organization. He/she is also authorized to sign the ACA Application for TCC (original or revised) and ensures that all the requirements are completely met. There must be two individuals to be listed as the responsible officials and are required to sign the application. The responsible official can also be the contact on the application.

Contact is the person responsible for transmitting and is also available for any inquiries from the IRS on daily basis. Two to ten contacts can be listed on a single application.

After enrolling, and as per the selected roles on the application, one or more TCC will be assigned.  

AIR: Channels & Testing

AIR comprises of 2 channels as transmission methods for electronic filing of ACA returns. One is ISS-UI channel and other is ISS-A2A channel.  On both the channels, submissions need to be transmitted through single, uncompressed and self-contained XML files. The XML rules for Forms 1094/1095-B and Forms 1094/1095-C are specifically created to identify the transmissions, submissions within transmission and records within the submission. Every transmission is identified through unique transmission ID that further aids in tracking. Before utilizing any of the 2 channels, issuers, software developers and transmitters are required to complete the testing in AATS (ACA Assurance Testing System). The testing practice needs issuers and transmitters to have an error-free test submission in order to ensure that they are capable of communicating with the system.

AIR: Explains ACA Applicable Rules

Though the system is designed to transmit the reporting data, it has a practical utility too. The various specifications in the forms and use of different indicator codes makes it easier for the reporting entities to exactly understand the reporting rules without making any errors. The system is so well-designed that if you make any wrong entry, it will not be accepted by the system, compelling you to make the corrections and submit again until the acceptable combinations are applied.

AIR: The Impact

The brokers and carriers are much more familiar with the entire process of enrolling and reporting as compared to the employers. The employers are still struggling with the details of the reporting requisites and the AIR system itself. Though, delayed deadlines have brought some relaxation to the employers, yet many of them are considering taking assistance from the third party solutions or brokers or software systems to get the job done. Many benefit administration systems have integrated ACA reporting module to make it easier for the employers, yet many are still in their beta testing mode and making changes to the system as per IRS guidelines.

Thus, in case employers are looking for outside help or those who plan to perform the exercise on their own, they must know that IRS permits only approved software to transmit the returns. While the deadline delay has helped them get some more time to prepare, it’s preferable to get started on time and have an error-free reporting.