ACA Compliance for Employers Remains Unchanged in 2018: What You Need to Know

Employer ACA compliance remains unchanged in 2018, and is likely to remain unchanged in 2019.

For ACA compliance, employers must continue to offer coverage in 2018, keeping in mind that the penalties for non-compliance are larger than they were in prior years.

The Tax Cuts and Jobs Act was signed into law in December 2017, and January saw a delay in the implementation of some ACA taxes. ADP's Tax Reform Webinar walks you through the pertinent changes implemented by the tax bill, as well as a summary of how IRS Notice 2018-06 and January's continuing budget resolution affect your ACA compliance.

The tax bill will repeal the ACA's individual mandate penalty, but not until 2019. And there have been no changes to the employer mandate.

2018 ACA compliance: Rules remain the same; penalties are larger

This year, compliance with the ACA remains as it was in 2017, although the penalties for non-compliance with the employer mandate are now higher:

  • The penalty for not offering coverage is $2,320 per employee (minus the first 30 employees), and the fine for offering coverage that is unaffordable or does not provide minimum value is $3,480 multiplied by the number of full-time employees who receive a premium subsidy in the exchange. Keep in mind the definition of affordable has changed for 2018. Those amounts are higher than the respective penalties of $2,260 and $3,390 in 2017.
  • The penalty for failing to correctly file and distribute Forms 1094/1095-C increases from $260 per employee for the 2017 tax year to $270 per employee for the 2018 tax year.

Since nothing has changed about the employer mandate or ACA reporting, employers need to stay the course with ACA compliance in 2018. Employees can't be required to pay more than 9.56 percent of their household income for employee-only coverage this year, down from 9.69 percent in 2017.

What to expect going forward

Significant health care reform legislation at the federal level in 2018 is unlikely. Individual market stabilization measures may be implemented, but they are not expected to affect the rules that apply to large employers.

State legislatures are considering a wide variety of bills, including efforts to implement state-based individual mandates, various provisions aimed at stabilizing the individual insurance market and potential employer penalties if employees receive Medicaid benefits, which is not a factor under ACA rules.

It's expected that residents in most states will not face penalties for being uninsured starting in 2019, and the Congressional Budget Office projects that without the ACA's mandate penalty, 4 million fewer people will have health insurance in 2019. But a single full-time employee obtaining subsidized coverage in the exchange will continue to trigger the employer mandate penalties, so employer ACA compliance will remain as important as ever.

For more on Health Care Reform developments, watch ADP's webcast It's Been Quiet on the Health Care Front….Or Has It?