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ACA Enforcement Has Begun: Are You Ready?

Oct 25, 2017

Even as the political rhetoric continues in relation to the Affordable Care Act, the IRS is stepping up enforcement of both the individual mandate, which requires individuals to obtain health insurance, and the employer mandate requiring many employers to offer insurance coverage to their employees and then report on that offer annually to the IRS. In a recent statement from the IRS, it’s been made clear that individual taxpayers will no longer be able to omit coverage information from their personal tax returns, opening themselves up to a “shared responsibility” payment (a/k/a penalty). In addition, in May 2017 the IRS completed development of a new technology system that aggregates information from health insurance providers, individual taxpayers, employers, and the insurance exchanges and can identify individuals and employers who are subject to “shared responsibility” payments. Add to this the many “non-filing” letters the IRS has sent to employers with at least 50 W-2s, and it appears that the IRS will soon assess penalties to noncompliant employers.

Enforcement of the individual mandate for calendar year 2014 is in full swing, and Washington insiders are hearing murmurs that the IRS will soon be released to begin enforcement for the 2015 tax year. 2015 was the first year employers were required to comply with the ACA regulations. Many of these employers are going to be rudely awakened by the size of these penalty notifications. For example, an employer with 100 full-time employees that did not offer coverage is subject to the following estimated penalty amounts:

Tax Year  Annual Penalty Amount Number of Full-Time Employees Penalty Before Exemptions

 Exemptions: (80 for 2015) (30 for 2016)

Penalty Total














In addition to the penalty for not offering coverage, in response to not filing the Forms 1095-C with the employee and the IRS, the IRS would assess a $500/form penalty for 2015 and a $520/form penalty for 2016. The 2016 total penalty cost for an employer with only 100 employees for 2016 would be in excess of $200,000.

It’s clear that employers can no longer turn a blind eye to ACA compliance. As a result, many employers are turning to their existing service providers to identify the best solution to comply with these complex rules. Wipfli’s team of health care reform experts are ready and available to assist clients with all areas related to their compliance strategy (see our health care reform services).

Please contact your Wipfli relationship executive if you want to ensure that your organization is well prepared for ACA compliance. Remember, it’s not too late to file forms for prior years. There is a big difference between a late-filing penalty and willful noncompliance.