ACA Penalties: What You Need to Know as 2017 Approaches

October 28, 2016


ACA Penalties: What You Need to Know as 2017 Approaches

The Affordable Care Act (ACA) continues to loom large in the business world, impacting companies both large and small. As regulations that were initially delayed are starting to come to fruition, companies need to keep up with legislation changes and updates. This requires due diligence, expert management and a dedication to ensure new compliance guidelines are met. New changes mean new penalties for those who knowingly, or even unwittingly, fail to follow the more than 40,000 pages of regulations set forth by the ACA. Here are just a few of the changes and corresponding penalties to look for in the coming months.

Health Plan Transition Relief
Until now, the Employer Shared Responsibility payment came with transition relief for applicable large employers (ALEs). Companies were given extra time to make sure that the minimum percentage of employees were covered under the ACA. Not anymore. That transition relief expires on January 1, 2017. This means employers with an average of 50 employees or more must be compliant (95% of full-time employees insured) or face penalties. According to IRS Notice 2013-54, this penalty may include a $100/day tax per applicable employee, which can bring the yearly penalty to $36,500 per employee.

Reporting Errors
Good faith filing is coming to a close for employers when dealing with 1094-C and 1095-C forms. Any errors in reporting or processing these forms will now face IRS penalties, which means incorrect, incomplete or late submissions will cause stiff penalties. With a fine of $250 per form, fees can reach a maximum of $3,000,000 according to IRC section 6724.

Patient Protection Notice
The often simple step of providing health care plan participants with a written notice of their patient rights and protections is sometimes overlooked, mostly because the employer believes the insurer will provide a copy. In some cases, the insurer believes the same of the company involved. Unfortunately, this misstep will now cost an employer $100/day, with a $500,000 max penalty.

It’s obvious that compliance is becoming a paramount concern, as the Department of Labor intends to audit every applicable company for ACA adherence by the end of 2018. With the standard penalty sitting at $500,000 maximum (other fines can differ based on violation), companies must become compliant or face existential jeopardy. Competence in finding a solution for ACA adherence is critical, as pleading ignorance of regulations is no longer an option for employers.

Paycor has been helping companies large and small make the right choices when dealing with ACA compliance. Let us show you how our ACA Connect solution and dedicated team of ACA experts provides the help you need, both now and in the future.


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