Affordable Care Act Reporting – Penalties?

Beginning in January 2015, applicable large employers (ALE) must file Form 1094-C that indicates they have offered affordable health insurance coverage to at least 70% of their full-time employees (30 hours per week or 130 hours per month average).  (The 70% threshold will increase to 95% in 2016.)

If an employer does not meet the percentage threshold, it may be liable for a nondeductible “Assessment” of $2,080 for each full-time employee (30 hours per week or 130 hours per month) in excess of 80 (excess of 30 in 2016).

Because the assessment is determined separately for each month, if you think you will owe a penalty for the early months of 2015, it’s time to take corrective action now and offer affordable health coverage to your full-time employees to avoid additional penalties later.

Employers must also understand that even if they file correctly and follow the ACA regulations, they may still be assessed a “Shared Responsibility” penalty.  What happens if an employee deemed full-time throughout the “stability period”, later changes to part-time status?   If that happens and the employee goes to the Public Exchange (Marketplace) and receives a tax credit, the employer would be liable for an “Employer Shared Responsibility” (a/k/a affordability penalty) payment for that employee, which is $3,120 annually (indexed) for each full-time employee who receives health coverage through the Exchange with a premium tax credit.