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ACA Penalties Reviewed

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There are three types of ACA fines that an employer can incur for 2019:

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 $270/form.
  • The standard annual penalty cap is $3,339,000 per organization.
  • If the IRS determines that an employer’s failure to file is the result of intentional disregard, the penalty amount will be $540/ form without limitations.

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”

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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”

The following Blog links will give further details on the above:

https://www.integrity-data.com/blog/manage-aca-compliance-for-tax-year-2019-know-the-irs-penalty-risks/

https://www.integrity-data.com/aca-penalty-calculator/

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 2 and 1/4 (2.25) 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

Questions / Resources

If you have questions or comments please email Support@integrity-data.com.

If you would like to search for information and resources for Integrity Data products check out the following sites:

Last Review: 5/28/2020 – Revision: 2.2

Applies To: ACA Reporting Requirements

Categories:  Eligibility Reporting, ACA Reporting Requirements

Keywords: Penalty

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