The Reality Of ACA Penalties Post-Repeal
As Donald J. Trump officially takes his seat as the 45th President of the United States, we inch closer to the reality of an Affordable Care Act repeal. While the repeal is set to go in motion for June/July, the transition period—per House Speaker Paul Ryan—can take years to accomplish. The target year for a full ACA repeal is 2019.
What does that mean for employers? Well, the IRS has already expressed stringent enforcing of payment for penalties for the years 2015, 2016, and eventually 2017. While 2018 is on the horizon, the three aforementioned years are the current ones that employees should pay close attention to. The penalties for 2015 will be going out soon, but 2017 has its own set of new penalty rates in mind:
· For ALEs who do not offer healthcare to 95% of their full-time employees, the penalty for 2017 is $2,260 per employee.
· For ALEs who offer healthcare that is either unaffordable or lacks the required minimum value, the penalty for 2017 is $3,390 per employee who obtained a Premium Tax Credit due to a Marketplace purchase.
Despite the wavering opinions on an ACA Repeal, the penalties will remain in place. The Congressional Budget Office estimated last year that in a 10-year span, $225 billion are predicted in penalties, with $31 billion for this reporting period alone. Even trimming a few years off that prediction due to a repeal would still leave several billion dollars on the table for employers to pay for lack of ACA compliance.
It’s a stark reminder to employers that they must maintain compliance even in the face of a repeal. The IRS etches out all required information here in their latest Q&A, but employers should be proactive in ensuring their compliance for the upcoming tax years.
At Trusaic, we place the onus on preventing penalties and managing compliance in the ever-changing environment of healthcare. Click here for information on how to handle and ACA Audit and what to do if your company falls on the wrong side of compliance.
To learn more about ACA compliance in 2021, click here.
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