November 17, 2020 Year-End Payroll Planning

ACA and Year-End Considerations You Need to Review

With so many rules and regulations swirling around regarding ACA processing, year-end tasks and FFCRA limits, it’s important to review tasks and issues with a fine-tooth comb. That’s why the Wise team put together year-end and Affordable Care Act (ACA) notes to help keep you informed and compliant as 2020 comes to a close.

Some Year-End Notes:


  • Verify that there are no negative wages for any of your employees. If you do uncover negative wages, you should research and correct them.
  • Reconcile your taxes – run reports and make sure your taxes withheld match what you sent to your HCM vendor.
  • It is best practice to perform a reconciliation of all payrolls. Uncovering any differences now will pay off in the long run. Verify that all pay periods for the year balance and tax files were sent.
  • Check all employee Social Security numbers and addresses. Now is a good time to send an email or announcement to all employees asking them to check their information and make sure it is accurate before the processing of W-2’s begins.
  • Once the last pay period has been processed, posted and closed, you can begin to run and reconcile your W-2’s.
  • Check your deductions – if you will have an extra pay in 2020 because of the Friday, January 1, 2021 holiday, watch your deductions to make sure you do not over-withhold.
  • Double-check to make sure your employer cost for medical on employee W-2’s. If your system does not calculate/track the employer amount for medical, obtain the information from your HCM vendor, input it into your system for W-2 purposes. *Employer Cost of Medical amount gets recorded in Box 12 Code DD on the W-2.
  • Stay within your FFCRA Limits. If you have not, you will need to make adjustments.


FFCRA Limits:


Personal Sick (if the employee has COVID-19):

  • $511 per day
  • $5,110 Total
  • Total Leave Hours = 80

Caring for a sick family member:

  • $200 per day
  • $2,000 Total
  • Total Leave Hours = 80

Family and Medical Leave Act:

  • $200 per day
  • $10,000 Total
  • Total Leave Hours = 400


2020 ACA Processing Notes:


ACA 2020 Forms 1095-B and 1095-C due date extended for employers to provide employees their forms:

FROM:  January 31, 2021

TO:  March 2, 2021

Due dates for all other ACA related reporting remain the same.

  • IRS Electronic Filing deadline is March 31, 2021.

ICHRA:  Individual Coverage Health Reimbursement Arrangements

  • As of January 1, 2020, instead of a traditional group health plan, an ICHRA can be offered to a class of employees. E., Full-Time employees offered Group Health Plan and Part-Time employees offered ICHRA.
  • ICHRA Plan is selected through the Health Exchange by the employees.
    • Employees would enroll, manage renewals and risk.
    • Employees plan can be kept, even if they change jobs, as they own their plans.

ACA 2020 Form 1095-C proposed changes:

  • July 13, 2020 IRS proposed changes to Form 1095-C:
    • Employee’s Age on January 1
    • Line 14 New Codes: 1L – 1S for ICHRA
    • Line 15 Supports ICHRA employee contributions
    • Line 17 New Line added for Zip Code
  • If your Company DOES NOT OFFER ICHRA, there is no impact to your Form 1095-C reporting.
    • The Form 1095-C changes listed above are visible for 2020 reporting, but no data is required for Employee’s Age on January 1 or in Line 17 new Zip Code line.

ACA State Reporting Requirements are due to the federal reduction of the ACA’s individual mandate penalty amount to Zero ($0.00), so some states began enacting their own individual healthcare mandates and penalties.

  • Employers and insurers must report federal 1095-C and 1095-B data for residents of certain states in order to comply with state-level reporting.
    • 2006 Massachusetts required state filing, but typically the filing requirements are satisfied by insurance carriers, not employers.
      • Employers should ensure their insurance carriers are meeting their filing obligations.
    • 2019 State Reporting two (2) additional states added requiring state reporting:
      • New Jersey
      • District of Columbia
    • 2020 State Reporting three (3) additional states added requiring state reporting:
      • California
      • Rhode Island
      • Vermont

Please use the IRS ACA Website for up-to-date ACA Information.

*This information should not be interpreted as advice. Always check information at its source for confirmation.


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