By - September 19, 2017

What You Need to Know About 2017 ACA Penalties

ACA Penalties

With the American Health Care Act (AHCA) failing to pass through legislature, the Affordable Care Act (ACA) is still fully enforced. Large employer ACA compliance was required for 2015/2016, and is currently required for 2017. 

Penalties in 2017

The IRS may begin to collect on the penalties that are already legally in place. Here are the potential ACA penalties for 2017.

  • Failure to File and Inaccurate Filing Penalty: $260 - $520/form (can’t exceed $6M total).
  • Failure to Meet 95%: Employers not offering coverage to 95% of full-time employees and a full-time employee receives a marketplace subsidy, a fine of $2,260/12 per full-time employee per month applies to the EIN.
  • Failure to Provide Affordable Coverage: If a full-time employee receives a marketplace subsidy but the employer does offer affordable coverage, there’s a fine of $3,390/12 per full-time employee per month who received a subsidy on the exchange.

IRS notices for 2015 and 2016

The IRS is currently issuing notices to large employers to disclose whether they complied with the ACA reporting duties or not.

IRS notice Letter 5699 titled “Request for Employer Reporting of Offers of Health Insurance Coverage” is being distributed to employers that failed to provide Form 1095-C and file copies with Form 1094-C regarding reporting for 2015 or 2016. Employers that receive this letter will only have 30 days to complete and return the form.

Five response options for the IRS notice letter 5699 

  1. I was an ALE for calendar year 2015 and already filed Form 1094-C and Forms 1095-C with the IRS using name of employer and employer identification number on date.
  2. I was an ALE for calendar year 2015 and my Form 1094-C and Forms 1095-C are included with this letter.
  3. I was an ALE for calendar year 2015 and will file my Form 1094-C and Forms 1095-C with the IRS name of employer and employer identification number by date. (If more than 90 days from the letter, the response must explain why.)
  4. I was not an ALE for calendar year 2015.
  5. Other (must explain)

The letter also states, “If you are required to file information returns under IRC Section 6056, failure to comply may result in the assessment of a penalty under IRC Section 6721 for a failure to file information returns.” This refers to incomplete or incorrect forms.

The IRS does offer “Good Faith Relief” from filing penalties for timely filed forms if they are incomplete or incorrect for 2015 or 2016. This relief is only available upon showing “reasonable cause”. 

ACA guidance 

It's not too late to get help for ACA compliance and reporting.  We work with our clients to manage the complete ACA compliance and reporting process. If a client receives a notice, we help them determine which response option best fits their situation and work with them to provide evidence proving reasonable cause.

 

Need help with ACA Compliance?  Tango Health can help.

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