The 95 Percent Test: Gearing up for Another Round of Employer Shared Responsibility Penalties

Posted on: August 3, 2018 By:

Late last year, the Internal Revenue Service (the “Service”) began enforcing penalties with respect to failures to comply with the employer shared responsibility provisions of Section 4980H of the Internal Revenue Code.  In the coming months, the Service is expected to begin assessing penalties with respect to such failures occurring in calendar year 2016.  These penalties are of two varieties:

  1. Section 4980H(a) penalties are assessed for any month in which an applicable large employer (“ALE”) does not offer minimum essential coverage to substantially all (95% for 2016 and future years) of its full-time employees and their dependents and at least one full-time employee receives a premium tax credit. 
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Full Steam Ahead: IRS Moves Forward to Collect Affordable Care Act Penalties

Posted on: April 25, 2017 By:

As efforts to reform the Affordable Care Act (the “ACA”) stall in Congress, a recent government report suggests that the Internal Revenue Service is preparing to identify and collect employer shared responsibility penalties.

The Treasury Inspector General for Tax Administration issued the report, Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision, two weeks after House leadership retracted a bid to repeal and replace the ACA.

The report indicates that the IRS processed over 400,000 Forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and nearly 110 million Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) as of last October.  Read More ›

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A Little Breathing Room: IRS Extends ACA Reporting Deadline and Good Faith Penalty Relief

Posted on: November 28, 2016 By:

The IRS delivered welcome news to employers gearing up to meet the Affordable Care Act’s (“ACA”) information reporting deadlines for the 2016 calendar year. In Notice 2016-70, the IRS extended the deadline to furnish Forms 1095-B and 1095-C to employees.  The new deadlines are provided below.

  Old Distribution Deadline New Distribution Deadline
Form 1095-B (to employees) January 31, 2017 March 2, 2017
Form 1095-C (to employees) January 31, 2017 March 2, 2017

Importantly, the Notice does not extend the deadline for filing Forms with the IRS.  The deadline to file with the IRS remains February 28, 2016 (for paper filings) and March 31, 2017 (for electronic filings). Read More ›

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When Anything Less than 95% is a Failing Grade: An Update on the Employer Shared Responsibility Penalties

Posted on: May 26, 2016 By:

As a reminder, effective January 1, 2016, employers must offer minimum essential coverage to 95% or more (up from 70% or more for 2015) of their full-time employees and their dependents each month or pay a very steep penalty.  Missing the mark even slightly, for example coming in at 94%, will require the employer to pay a $2,000 annual penalty for each full-time employee (minus the first 30 full-time employees).

The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers, which I have updated to reflect certain recent guidance.  Most importantly the revised Checklist:

  •  now reflects how the penalties are adjusted each year (see footnote 7 of the Checklist for more information);
    • the $2,000 subsection (a) penalty is $2,080 for 2015 and $2,160 for 2016.
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