Global Tax Insights
Not all ACA Penalties Have Been DelayedJune 20, 2014
Do you offer health insurance to employees? If so, pay attention to the penalties under the Affordable Care Act.
Although the administration postponed the employer mandate for large employers until 2015, the non-compliant plan penalties have not been postponed. Regardless of the company’s size, if you are offering health insurance to employees, you must comply with the market reforms, new employer and plan sponsor requirements, and financing provisions.
What does the market reform address?
- Required benefitsthat must be included in health plans, and waiting periods.
- Annual limits. Insurers may not impose annual limits on the dollar amount of benefits for any individual, and they must provide certain preventative services without co-payments or other charges.
What are the Penalties?
The penalties for non-compliant plans are governed under IRS Section 4980D. The assessment is generally $100 per day per individual per violation or $36,500 a year for each individual. Employers must self-report section 4980D penalties on IRS Form 8928 within the specified timeframes. Keep in mind that additional penalties and interest apply for an untimely-filed Form 8928.
Employers cannot send their employees to a health insurance exchange with a tax-free contribution of cash to help pay the employee’s premiums. This type of an arrangement would create an employer payment plan and would not meet the market reform requirements of the Affordable Care Act (i.e. not impose annual limits on the dollar amount of benefits for any individual, provide certain preventative service without co-pays or other charges, etc.).
Don't Get Hit With Unforeseen Penalties!
All companies should be working with their insurance broker to make sure they are compliant on all health benefits so there are no surprise penalties assessed.If you have specific questions regarding additional tax penalties related to your healthcare plan, please contact Loree Dubois, CPA.