ACA Penalties Still Possible for Large Employers

Although President Trump has indicated that he will repeal and replace the Affordable Care Act, there are still provisions in place for prior years that apply. Even with his signing of the ACA Executive Order on January 20, it is unclear if the Order’s waiver and exemption provisions will result in the suspension of enforcement activity for employers. One of those activities is the large employer penalty (employer shared responsibility penalties).

Beginning in 2015, an applicable large employer (100 FTEs for 2015, 50 FTEs for 2016) may be subject to a shared responsibility penalty if either of the following apply:

1. The employer does not offer substantially all of its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.
2. The employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage, but it is unaffordable, or does not provide adequate coverage.

So far, we have not seen any notifications to employers related to these penalties. However, the IRS had said they would start enforcing this employer mandate in January 2017. The IRS would start by letting employers know whether they owe a penalty tax for 2015 (yes, two years later). Sometime in the next few months, the IRS will send out a preliminary notice to employers of their potential liability for the fine and give them a chance to respond before officially assessing the monetary penalty. It is important for employers that believe they are not responsible for the penalty to respond promptly, although they technically have 90 days to respond.

If you receive one of these notices by mail, give us a call and we can help you take next steps to respond. In the meantime, keep checking in to our website – we’ll update you as things develop.