Five ACA Penalties Employers are Facing
1. Individual Mandate Penalty
When a person files their taxes they must indicate if they have maintained minimum essential coverage all year. According to healthcare.gov, “If you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment.” The IRS then verifies their answer with the data they receive from insurance carriers and employers to determine if their answer was true. If not, they will be issued a penalty letter due for payment.
2. Form distribution to employees
By the end of January every year, employers must provide their employees with form 1005-B or 1095-C as applicable. Employees will need them while validating to the IRS and health exchanges of the type and cost of coverage they were offered and maintained. If employers miss the deadline by less than 30 days late on their delivery, the penalty is $50 per form. After the 30 days, employers will be penalized $250 per formthat was not distributed to the employees.
3. Form filing to the IRS
4. ‘A’ Penalties
If the employer fails to offer compliant coverage they must indicate so on the 1094-C forms. The IRS will automatically calculate ‘A’ penalties due by the employer of $2,160 per employee per year(adjusts annually for inflation). The IRS will make their calculations from the information submitted in Section III of form and issue penalty letters to employers due for immediate payment.
5. ‘B’ Penalties
Employers will be receiving letters from the federal and state health insurance exchanges in regards to employees of theirs who went to these various exchanges, purchased coverage and received a premium subsidy. The combination of an employee purchasing coverage from an exchange and receiving a subsidy is the necessary element to trigger a ‘B’ penalty of $3,240(adjusts annually for inflation).