A: The employer shared responsibility provisions were added under section 4980H of the Internal Revenue Code by the Affordable Care Act. Under these provisions, certain employers (called applicable large employers or ALEs) must either offer health coverage that is “affordable” and that provides “minimum value” to their full-time employees (and offer coverage to the full-time employees’ dependents), or potentially make an employer shared responsibility payment to the IRS, if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on a Health Insurance Marketplace (Marketplace).
Whether an employer is an ALE and is therefore subject to the employer shared responsibility provisions depends on the size of its workforce. In general, employers employing at least 50 full-time employees including full-time equivalent employees, are ALEs.
A: Minimum essential coverage is the standard of coverage(s) a health plan must maintain to meet the requirements of the ACA. Many types of coverage qualify, including job-based plans (including retirees and COBRA coverage, Marketplace plans, and Medicare). More information about plans that count as coverage is available on the IRS website.
To comply with the law, you must maintain minimum essential coverage throughout the year. Minimum essential coverage must meet both the minimum value and affordability requirements.
A: The ACA requires that any health plans offered to you must meet the minimum value standard, which means the plan pays for at least sixty (60) percent of medical expenses on average for a standard population. Most employer-sponsored plans today will easily pass this requirement.
A: The ACA requires that health plan coverage offered to you must be affordable as defined by the law. Generally, coverage is affordable if the amount you are required to pay for self-only coverage under the lowest cost plan offered by your employer does not exceed a percentage of your household income for the given tax year. For Tax Year 2022, the ACA Affordability threshold will be 9.61%.
A: The employer shared responsibility provisions generally were first effective in 2015. For Tax Year 2022, the key deadlines are:
- March 2, 2023: The due date for furnishing Form 1095-C to individuals.
- March 31, 2023: The due date for ALEs to complete e-Filing of Forms with the IRS
A: BenefitScape experience and knowledge in regulatory compliance, ongoing monthly hours tracking & eligibility management, and penalty risk assessment & remediation gives companies the confidence they need to ensure their ACA compliance is done right.
A: There are two different types of penalties as they relate to 1094 errors and 1095 errors: 4980H(a) and 4980H(b), commonly referred to as the “A” and “B” penalties.
The “ (A)” penalty could apply if an applicable large employer fails to offer coverage at all to a sufficient number of its full-time employees and dependents. The “ (B)” penalty could apply if the employer does offer coverage, but that coverage is either unaffordable or does not provide “minimum value” as defined by regulation.
Most errors related to B penalties can be caught by the Employer, corrected, forms reissued or resubmitted, and potential penalties lessened or avoided entirely (depending on the timeframe).
Corrections can be made as many times as is necessary to arrive at the most correct representation of the Employer and Employee reality, and if a Form is corrected AFTER the initial Submission to the IRS, the “Corrected” box is to be checked, and the Form(s) reissued and resubmitted.
A: BenefitScape offers a free ACA Audit that provides comprehensive analysis of your potential exposure.
A: Yes, we can perform a retroactive audit of your HR data and create a penalty letter response for you, while in parallel developing an ongoing ACA strategy to prevent future penalty letters.
A: According to the latest IRS publication regarding instructions for the Forms 1094C and 1095C (available here):
- The penalty for failure to file a correct information return is $280 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,426,000.
- The penalty for failure to provide a correct payee statement is $280 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,426,000.
- Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the requirement to file the returns and furnish the required statements. Penalties may be waived if the failure was due to reasonable cause and not willful neglect. See section 6724 and Regulations section 301.6724-1 and Proposed Regulations section 1.6055-1(h) (which relate to Form 1095-C, Part III). For additional information, see Pub. 1586.
BenefitScape has methods and procedures in place to support a reasonable cause methodology in case penalties appear.