ACA Penalty Assessments Are Coming: Here's What HR Leaders Need to Know

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New guidance released by the IRS affirms that ACA reporting requirements will be enforced this tax year. While your organization should not be surprised by this news, it is nonetheless critical to understand the implications of this messaging from the IRS. ADP's Eye on Washington highlights the full details of the release from the IRS, and here we review the most relevant information for HR leaders:

"On November 2, 2017, new guidance was released by the Internal Revenue Service (IRS) concerning Employer Shared Responsibility assessments under the Affordable Care Act (ACA), also known as the Section 4980H Employer Mandate penalty. Among other things, the guidance indicates that the IRS plans to issue ACA employer assessments in the next few weeks covering tax year 2015. This new guidance from the IRS is significant because it advises that, for the first time, the IRS will be issuing ACA employer assessments since mandatory ACA reporting for Applicable Large Employers (ALEs) began.

An ALE is generally an employer that employed an average of at least 50 full-time employees (including full-time-equivalent employees) during the preceding calendar year. Assessments are calculated separately for each employee and each month during which a full-time employee received subsidized ACA coverage. ALEs first filed and furnished Forms 1094-C and 1095-C in early 2016 for the 2015 calendar year.

For purposes of the ACA's Employer Shared Responsibility provisions, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week or has 130 hours of service in the month. If no full-time employee receives a premium tax credit, an ALE will not be liable for an Employer Shared Responsibility payment. Several types of transition relief under the Employer Shared Responsibility provisions were available for calendar year 2015. For further details on 2015 transition relief, refer to the IRS website at https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provision-transition-relief-for-2015-plan-years"

To learn more about this new guidance from the IRS and what your organization needs to know to remain compliant, click here for the full details in ADP's latest "Eye On Washington."