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US Businesses Face Increased IRS Penalties Next Year

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US Businesses Face Increased IRS Penalties Next Year

The IRS has released the employer penalties for non-compliance with the ACA for Calendar Year 2018. Here are the details:

 

The Employer Shared Responsibility Payments (ESRP) for Sec 4980H(a), which is the penalty for an Applicable Large Employer (ALE) which fails to offer Minimum Essential Coverage (MEC) to 95% of Full-Time employees, has increased to $2,320 per employee annually from $2,260. This applies to all Full-Time minus the first 30. So, if, for example, a business has 130 employees, and one employee gets Health Coverage through an ACA Marketplace and receives a premium subsidy (a.k.a. a Premium Tax Credit (PTC)), the 4980H(a) Penalty for that employer is $19,333 for each month the employee who received the PTC was deemed eligible for coverage according to ACA regulations, up to a maximum of $232,000 annually for that employer.

 

The ESRP for Sec 4980H(b), which is the penalty for an employer which fails to offer Health Coverage that is Affordable and meets Minimum Value (MV) requirements, has increased to $3,480 annually from $3,390. This penalty is assessed for each Full-Time employee that received a PTC from an ACA Marketplace, and also received an offer of coverage from the employer, but the coverage was unaffordable (more than 9.56% of income) or did not provide Minimum Value. This penalty is also applied monthly for each month the employee received the PTC and was deemed eligible for coverage according to ACA regulations.

 

An employer cannot be penalized for both the 4980H(a) and (b) penalties.

 

Finally, the penalty for an employer which fails to provide 1095C statements to employees by the deadline (January 31, 2019) has increased to $270 per employee from $260 per employee.

 

BenefitScape assists employers of all sizes and industries with ACA Compliance. For more information Contact Kim Phillips.

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