According to the Affordable Care Act (ACA), employers with at least 50 full-time or full-time equivalent employees are required to offer affordable health care insurance to their employees. This was set to begin in calendar year 2015. Well … that requirement then changed for 2015 to employers with at least 100 employees. And then, in 2016, it reverted to at least 50 employees. Also, the IRS extended a “good-faith effort” reprieve to employers for 2015 filings … well … that was modified to include 2016 filings as well and only for employers that actually filed the necessary forms. Then, in January of 2017, newly elected President Trump signed an executive order that eliminated the ACA reporting requirement. Well … that only applied to individual taxpayers, not employers. Wrap that with all the political rhetoric and fanfare about repealing the ACA coupled with the IRS’s delayed enforcement and you have a perfect storm of employers who believe they are not at risk of penalties, when nothing could be further from the truth.
Many employers today are under a false impression that they have done everything they need to do at this time and, as a result, are protected against ACA penalties. Employers have interpreted that the January Executive Order to “ease the burden” of the ACA meant they didn’t have to file the required ACA forms and/or offer affordable coverage to their eligible employees. Other employers believe they are protected from penalties merely by timely filing forms for calendar year 2015 and 2016. The IRS’ lack of enforcement to date has only furthered these misconceptions and lent credence to this perception by employers. Employers submitted timely ACA information returns and the IRS said it was “accepted” and employers resolved an “errors” reported by the IRS. So, that’s that, no worries, we’re good to go, right?
Not so fast – according to industry insiders, it has been stated that the IRS has a good handle on employers and individual taxpayers who are subject to a “shared responsibility payment.” This is based on information gathered from the marketplace exchanges, insurance companies, employers and individual taxpayers. A new system was brought online in May of 2017 which aggregated the information from these various sources and can now identify those who are subject to penalty. The IRS is reportedly waiting for the administration to give them the “go ahead” on enforcement to move forward. It’s not clear how soon this will occur, but be sure of this, many employers will be shocked when these penalty notifications hit their doorstep.
On an IRS payroll industry call held August 3rd, 2017, the IRS reminded participants that it’s always better to file late than not at all. Stiff penalties apply for willful non-compliance in addition to any penalties for not offering compliant coverage to ACA-eligible employees. To that end, if your organization has not actively complied with the ACA, it’s time to start now. It’s clear by the Failures to repeal ACA in the Senate make it clear that the requirement of employers to offer coverage to ACA-eligible employees and to report on those offers to the employee and IRS is here to stay. It’s also important to realize that all legislative action recently considered, short of a full repeal, had some form of employer reporting included. ACA is still the law of the land!