Employers will NOT get a free pass on 2016 ACA Reporting
Content updated on November 16th.
What a week! The election of Donald Trump as our next president has already raised some questions around what happens to the Affordable Care Act, specifically the Employer Mandate. Many have started speculating on what may happen. Suffice to say that the possibilities are endless and nobody really knows what can or will happen.
Here is what we do know:
6 years since its enactment, the ACA is a complex, interdependent set of rules that is now firmly entrenched. Improving, repealing and replacing…whatever happens, it won’t be quick. Repealing any or all provisions without replacing and keeping all inter-dependencies in mind is not realistic – loss of coverage to 22 million people hangs in the balance.
Any changes are unlikely to be effective before 2019. Think about this: the ACA was enacted into law in 2010, yet the employer mandate only got enforced in 2015! Helen Karakoudas, Director of ACA Insights and our former Director of Education has written an excellent LinkedIn post explaining this further and comes to the same conclusion: we are in this for the long ride.
The associated penalties around enforcing the employer mandate represent a significant source of revenue for the IRS – not something they will let go of quickly, especially since they spent a lot of that money already, for building the infrastructure and funding the premium tax credits (PTCs), which the government has already paid out. With an existing, enormous federal deficit, which Republicans have consistently vowed to reduce, these funds will continue to be desperately needed, until that too can be replaced.
There are currently 2 sets of penalties and they can be huge:
The coverage penalties for failing to offer adequate healthcare coverage to employees These can be more than $2,000 per employee or more than $3,000 per employee depending on the nature of the failure. For example, if the employer did not offer coverage to 95% of its full time employees and it had 1000 employees, the penalty could be in excess of $1.9 million.
The reporting penalties for failing to distribute 1095-C’s to the employees and file the 1094-C with the IRS. These penalties can reach $260 per form, adding up to more than $6 million for combined filing and employee statement distribution failures.
While the ACA will surely evolve under President Trump, compliance in 2016 and 2017 should be an easy decision for employers. With 2016 ACA reporting due in a little over 2 months, the cost of compliance is small compared to the steep penalties for non-compliance.
As a reminder, the 2016 reporting deadlines are:
March 2, 2017 for sending 1095-C and 1095-B forms to employees.
February 28, 2017 for sending paper copies of 1094-C forms and 1094-B forms (along with copies of the respective 1095-C and 1095-B forms) to the IRS.
March 31, 2017 for sending electronic copies of 1095-C and 1095-B forms (along with copies of the respective 1095-C and 1095-B forms) to the IRS.
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