ACA Matters: May 2017 Edition

05-19-2017
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Is ACA Passé or are ACA Penalties on the Way?


According to the Department of the Treasury, ACA penalties are on their way.

On April 7, 2017, the United States Treasury stated that employers should expect to receive IRS proposed employer shared responsibility penalties in the coming months for the 2015 reporting year.

On May 4, 2017, the United States House of Representatives passed a bill to repeal much of ACA as we know it.  Next step is for the Senate to create their own version of the bill, vote on that, and then attempt to reconcile the two versions through an appointed conference committee.  Once that version is approved by both houses it will go to the President.  This process takes time.  In the interim, the current law remains in effect.

So what should be employers’ best practice reaction to these developments?

Industry analysts advise employers to distinguish between law enforcement and proposed legislation.

ACA is currently the law, and the IRS, authorized by Congress to enforce that law by issuing shared responsibility penalties, has indicated that it is in the process of issuing these penalties.  2015 penalties are expected in the coming months, and 2016 penalties are expected later in the year.

In contrast, proposed changes to the law will take time to proceed through the Senate, return to the House, be the subject of much bi-partisan debate and modification, and finally come to a vote.

Therefore, employers must continue to protect themselves from potential ACA compliance penalties of $2,260 per employee by:

  • Tracking employees’ full-time status
  • Offering minimum value coverage to full-time employees and their dependents
  • Testing affordability of coverage offers
  • Accumulating monthly health insurance information for each employee for filing 2017 Forms 1095-C and 1094-C

The proposed penalties will likely list employees who received subsidies on the Exchange.  You can challenge a penalty by asserting that the individual was not your employee, was not full time, or received an affordable offer.  If you do not respond, the IRS will consider the penalty final and proceed to collection.

In addition, you can receive a penalty of $520 for each 1095-C that you do not file and furnish to your employees on time and with accurate information, up to a maximum penalty of $6,357,000.

Viventium’s ACA tools enable you to keep in ACA compliance, prepare to challenge upcoming penalty notices, and minimize penalty exposure.  At the same time, Viventium’s compliance team will continue to keep you updated about developments with the ACA repeal/replace legislation.


Test Your ACA IQ


Fred Hernandez owns 55 buildings – 25 in New York and 30 in New Jersey.  Each building has its own Federal Employee ID Number (FEIN).  Each building employs for at least 30 hours per week a superintendent, handyman, plumber, electrician, and an independent contractor for exterminating.  None of the buildings offer health insurance to workers.  Fred is also the CEO of Sunshine Management Corp., which manages all of the buildings.  Sunshine itself has 60 ACA full-time employers and does not offer any insurance.  Which TWO of the following are true?

A.   Only Sunshine Management risks employer shared responsibility payments.
B.   Sunshine and each of the 55 buildings are subject to ACA.
C.   Anyone of the entities could be potentially liable for a penalty of about $2,260 times 280.
D.   Anyone of the buildings could be potentially liable for a penalty of about $2,260 times 4.
E.    Sunshine could be potentially liable for a penalty of about $2,260 times 30.

Click to see the correct answer.

 


This information is for educational purposes only, and not to provide specific legal advice. This may not reflect the most recent developments in the law and may not be applicable to a particular situation or jurisdiction.

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