Penalties Now Being Assessed for the Affordable Care Act (ACA)
The Affordable Care Act (ACA) is alive and well and the IRS has stated it is now starting to send those penalty letters to employers for non-compliance. The IRS is currently reviewing the 2015 and 2016 reporting filings, and have created a system to “catch” all employers who have not filed at all. The new system will also automatically calculate the penalties of those that have not filed. Best advice from legal experts say that if you have NOT filed for 2015 or 2016 you should file now to reduce any penalties you may be assessed.
As we gear up for another year of ACA reporting, it is important to take a few minutes and review what you have done in the past two years, review what has worked and where you may have had some issues and/or errors in preparation. Defining these areas will help you improve your process in gathering information for the 2017 reporting due on January 31 st of 2018. Payroll vendors have worked on refining their systems and everyone is becoming more aware of what the obligations truly are.
Documentation will be key in these areas as well. If you do receive an IRS penalty letter you will need documentation to prove you were in compliance with offering insurance to at least 95% of your full-time employees. If you made an offer to an employee who declined, then went to the marketplace, enrolled and received a subsidy, you will want proof that you made the offer. You will want to have a signed form stating they are declining your offer of coverage.
You will want to review the affordability percentages, not just for the year you are reporting, but for the following year as well. The affordability percentage actually decreased for 2018. More information can be found here.
The 2017 forms (1095 and 1094 series) are in draft form on the IRS website. For more information on the draft forms and how to access them – Click Here.
As we wait for the final forms and instructions to be released, now is a good time to begin your process of reviewing all your employees, who you made an offer of coverage to and what documentation you may need to defend yourself against any IRS penalties.