KB13-026

There are three types of ACA fines that an employer can incur:

Penalty for not filing any federally mandated ACA report

  • The basic penalty for failure to file or furnish a correct information return or payee statement is $250/form.
  • The standard annual penalty cap is $3 million.
  • If the failure relates to both an information return and a payee statement, the penalties are $500 per statement with a $6 million cap.

Penalty for filing an ACA report documenting that an employer did not offer health insurance

  • Triggered when an employee who should have been offered coverage goes to an exchange and gets subsidized coverage
  • Called the “ACA sledgehammer penalty”
  • For 2016, this penalty for each month that an employer does not offer coverage to an eligible employee is $2,160, divided by 12, multiplied by the total number of full-time employees or full-time equivalents minus 30.
  • The current multiplier, before taxes, is $180 a month per employee, for each month coverage is not offered.

Penalty for filing an ACA report documenting that an employer offered health insurance that does not meet ACA standards

  • Triggered when an employee who should have been offered coverage goes to an exchange and gets subsidized coverage
  • Called the “ACA tack hammer penalty”
  • For 2016, the penalty for each month that an employer does not offer coverage which is deemed affordable or which does not meet the ACA standard for minimum value is $2160, divided by 12, multiplied by the number of full-time employees who sought coverage on an exchange and received a premium tax credit or cost-sharing subsidy that month – not to exceed the following: $3,240, divided by 12, times the total number of full-time employees or full-time equivalents minus 30. For calendar year 2017, the adjusted $2,160 amount is $2,260 and the adjusted $3,240 amount is $3,390.
  • The current multiplier, before taxes is $270.00 a month per employee, for each month offered coverage was not deemed affordable or did not meet the ACA standard for minimum value.

Here are some considerations to help determine how part-time and seasonal employees equate to full-time and FTE employees:

  • Only employees working in the United States are counted.
  • Volunteer workers for government and tax-exempt entities, such as firefighters and emergency responders, are not considered full-time employees.
  • Teachers and other education employees are considered full-time employees even if they don’t work full-time year-round.
  • Seasonal employees who typically work six months or less are not considered full-time employees. This includes retail workers employed exclusively during holiday seasons.
  • Schools with adjunct faculty may credit 21 /4 hours of service per week for each hour of teaching or classroom time.
  • Hours worked by students in federal or state-sponsored work-study programs will not be counted in determining if they are full-time employees

 

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Last Review: 5/17/2017 – Revision: 2.0

Applies To: ACA Reporting Requirements