The Affordable Care Act (ACA) is still the law of the land, having survived attempts to both repeal and replace the legislation. It now has real teeth, with the dollar amounts of financial penalties having doubled in recent years. Here is what HR professionals need to know to prepare for the upcoming filing season and avoid expensive punishments.
Deadlines
The due date for distributing forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage) to individuals is January 31, 2018. In addition, the due date for filing forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns), 1095-B, and 1095-C with the IRS is March 31, 2018, if filing electronically.
The IRS has extended those due dates in the past, but there have been no announcements this year regarding an extension for the upcoming filing season.
Penalties
Failure to promptly and correctly file ACA information returns with the IRS and provide copies to the proper recipients could lead to significant penalties. Until recently, the maximum penalty a business could face for not filing correct information returns or not providing correct payee statements was $100 per return, with all penalties capped at $1.5 million for either infraction.
Now, penalties have more than doubled, with punitive amounts reaching up to $260 per return with a maximum penalty for either infraction of more than $3 million. There are no caps on penalties for those who intentionally disregard their information reporting requirements, making prompt and correct filing even more essential.
Conditions for Penalty Relief
The IRS extended relief from the aforementioned penalties in 2015 and 2016 for health care providers and employers that can show they have made good faith efforts to comply with information reporting requirements. However, this relief does not apply to filers who fail to furnish or file a statement or return in a timely manner.
When leveraging penalties, the IRS will consider good faith efforts such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service, or testing the ability to transmit information to the Service. The IRS will also take into account the extent to which the employer or other coverage provider is taking steps to ensure compliance with future reporting requirements.
Filers that experience errors reporting a recipient’s TIN filing Forms 1095-B or 1095-C will not be subject to penalties for failure to report a TIN if they comply with the requirements of Treas. Reg. 301.6724-1(e) with the following modifications (see Notice 2015-68):
- The initial solicitation is made at an individual’s first enrollment, or
- The second solicitation is made at a reasonable time thereafter, and
- The third solicitation is made by December 31 of the year following the initial solicitation.
The initial solicitation requirement is satisfied for already enrolled individuals if the reporting entities request enrollee TINs as part of the application for coverage at an individual’s first enrollment. Furthermore, a reporting entity that makes the first annual solicitation within 75 days of the initial solicitation will be treated as having made the second solicitation within a reasonable time.
ACA Reporting Penalties Are Getting Tougher
|
2006 |
2010 |
2015 |
Current |
|
|
Failure to File |
$50 |
$100 |
$250 |
$260 |
|
Filed late, but within 30 days of due date |
$15 |
$30 |
$50 |
$50 |
|
File after 30 days, but before Aug. 1 |
$30 |
$60 |
$100 |
$100 |
|
Intentional Disregard |
$100 |
$250 |
$500 |
$530 |
|
Max Amounts |
2006 |
2010 |
2015 |
Current |
|
Failure to File |
$250,000 |
$1,500,000 |
$3,000,000 |
$3,193,000 |
|
Filed late, but within 30 days of due date |
$75,000 |
$250,000 |
$500,000 |
$532,000 |
|
File after 30 days, but before Aug. 1 |
$150,000 |
$500,000 |
$1,500,000 |
$1,596,000 |
|
Intentional Disregard |
No cap |
No cap |
No cap |
No cap |
For more information, see these IRS publications: 1, 2, 3
Take Action
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