Tag Archive for: ACA Penalty

Opt-in vs Opt-out Health Insurance: What you Need to know

Large employers offering employees health benefits need to choose between opting all employees in automatically, encouraging them to opt-in, or making them opt out of health benefits. When it comes to health insurance, opting in and out plays a key part in enrollment. Using the right strategy can help you as a large employer provides coverage for your employees. 

 

Health insurance for employees promotes a healthier workforce because they partake in preventative care, which in turn creates more productive employees with higher morale. Health insurance keeps employers healthy through annual checkups, vaccinations, lab work, screenings, and immunizations. 

Increased employee morale because of benefits will influence your company positively because it: 

  • Increases teamwork across the organization 
  • Causes better retention of employees 
  • Increases productivity

The American Hospital Association reports, “health insurance facilitates access to care and is associated with lower death rates, better health outcomes, and improved productivity.” 

When employee health is supported, they are able to show up for work and be more productive. This reduces the amount you need to spend on paid time off, employee coverage, or hiring new employees. 

The Society for Human Resources Management found that it costs at least over $4,000 to hire and train a new employee, and can take up to 52 days to fill that position. Companies with 0-500 employees can expect to spend over $7,500 in hiring costs. Hiring a new employee to replace one who fell ill due to preventable illness because of lack of insurance is a costly and unnecessary expense. 

Opting in vs Opting out 

Offering employee benefits produces numerous positive outcomes for your company and your company’s employees. With this in mind, how does opting in and opting out of health insurance influence you as an employer?   

Opting in is the positive action taken to subscribe or enroll in health insurance whereas opting out requires that the employee automatically is signed up for health insurance, but they need to be able to unenroll just as easily. Persons opting in must check boxes or fill out information to agree to enroll. Persons opting out must uncheck or fill out information to end enrollment. 

 

A powerful example of the power of opting in or out comes from organ donations. European countries follow opting out options for organ donations. In order to indicate you do not want to donate organs in case of an accident, you must opt-out. Nearly all European countries with opt-out organ donation policies have nearly 100% organ donation participation among their people.

 

On the other hand, America and other countries that facilitate an opt-in policy with organ donation reap vastly different results.  Countries with opt-in policies have on average about 15% participation. 

 

The Association for Psychological Science found that “studies show that relying on inaction yields better results.”  

The psychology behind opting in and opting out

Psychologically, removing obstacles that make the desired behavior as easy as possible and obstacles in the way of unwanted behavior results in a performance of that desired behavior. Depending on the desired outcome, people will choose to opt-in or opt-out based on whichever action or option is easier.

 

The father of Social Psychology, Kurt Lewin, said, “make the actions you want to encourage easier, akin to moving downhill; and make the actions you want to discourage more difficult, aking to moving uphill” 

How does this influence your company? 

Employers encouraging employee health benefits because of their numerous positive rewards should consider using an opt-out method for higher retention of group health insurance.  

 

Opting out policies to consider are: 

  • “Opt-out arrangements should be offered under a Section 125 cafeteria plan to avoid unfavorable employee taxation.
  • The Affordable Care Act will consider certain opt-out payments as part of the employee’s premium for determining affordability under the act.
  • Unconditional opt-out
    • Conditional opt-out 
    • Eligible opt-out
  • Opt-out incentives should be offered to all eligible employees.
  • Federal and state law may consider opting out incentives to be wages for overtime pay.” 

 

At SBMA, we offer affordable benefits for everyday people that are compliant with the Affordable Care Act. It covers medical, ancillary, worksite, and virtual health. 

Read about why health insurance is important for your business here.

Voluntary Benefits Aid In Attracting the Best Employees

Including options for voluntary benefits and supplemental benefits is quickly becoming the norm for most employers who offer health insurance to their employees. As an employer, attracting the best talent and keeping them is of the utmost importance to maintaining a successful business. 

Over the last few years, there has been an increase in demand for voluntary benefits. While major medical coverage is the foundation of a good employee benefits program, it’s important to ask the question: how can I use these voluntary benefits to make my company more attractive to new prospects?

Let’s take a look.

Benefits of Offering Voluntary Benefits to Employees

Enhanced Employee Satisfaction and Retention

Offering voluntary benefits can increase employee loyalty and commitment to the company, as it shows that the employer is invested in their well-being.

Employees who have access to a wider range of benefits may experience less financial stress, which can lead to better job performance.

Access to voluntary benefits can also contribute to higher morale among employees, leading to a more positive work environment.

Attracting Top Talent

Companies that offer a comprehensive benefits package, including voluntary benefits, have a competitive edge in attracting top talent in their industry.

The ability to offer more benefits may also lead to an increase in job applicants, as potential employees are drawn to companies that invest in their employees’ well-being.

By offering a wider range of benefits, employers may also be able to recruit and retain employees who would otherwise look for positions with higher salaries.

Cost-effective Way to Offer More Benefits to Employees

Many voluntary benefits have limited or no cost to the employer, allowing them to offer more benefits without increasing their budget.

Voluntary benefits can also be affordable options for employees who may not have access to certain benefits otherwise.

Offering voluntary benefits can also provide tax advantages for both employers and employees, further increasing their value.

Most employers view voluntary benefits as a way to provide a choice to their employees, to offer options for their diverse workforce, and to ensure that their employees are happier and healthier. Employees need solutions that they can cater to their specific lifestyle.

Voluntary Benefit Options

Employers can offer a variety of voluntary benefits to employees to support their overall well-being and attract top talent. Health and wellness benefits such as telemedicine, wellness programs, and critical illness insurance can help employees maintain good physical and mental health. 

Financial benefits like retirement savings plans, student loan assistance, and life insurance can help employees manage their finances and plan for the future. Lifestyle benefits such as pet insurance, legal assistance, and travel assistance can provide additional support for employees’ personal needs.

 Other popular voluntary benefit options include hospital confinement, accident and critical illness coverage, disability, cancer, legal services, identity theft protection, and commuter benefits. This shift towards offering a wide range of voluntary benefits allows employers to align their benefits strategy with their overall company values and attract employees who value comprehensive coverage. Additionally, offering voluntary benefits can help employers retain top talent and create a loyal, committed workforce.

Implementing Voluntary Benefits Programs

Employee surveys and needs assessments are critical to identifying the most valuable benefits to offer in a voluntary benefits program. Employers can use surveys to gather information about what types of benefits employees would be interested in and what benefits they may already have. Additionally, needs assessments can identify the specific needs of different employee groups, such as new hires, long-term employees, or those approaching retirement. This information can help employers choose the benefits that are most relevant and valuable to their employees.

After identifying the most valuable benefits, the employer must evaluate and select benefit providers that offer the best value for the company and employees. This involves researching and comparing different providers to find the best offerings and pricing. Employers should also ensure that the providers they choose have a good reputation and are reliable.

Once the benefits have been chosen and the providers have been selected, the employer must communicate the benefits options and enrollment procedures clearly to employees. This may involve creating informational materials such as brochures, presentations, or videos that explain the benefits and how to enroll in them. Employers may also want to offer workshops or one-on-one consultations to help employees understand the benefits and make informed decisions about their enrollment.

Finally, to ensure the program’s success, the employer should measure and evaluate its effectiveness regularly. This may involve collecting feedback from employees, tracking enrollment rates and utilization of benefits, and reviewing the program’s impact on employee satisfaction and retention. This information can help employers identify areas of improvement and make adjustments to the program to ensure it remains aligned with employee needs and expectations.

In Summary

Offering voluntary benefits is an effective way to attract and retain top talent, increase job satisfaction and performance, and provide cost-effective benefits to employees. Employers should conduct employee surveys, evaluate benefit providers, communicate benefits options clearly, and measure program success to ensure a successful voluntary benefits program. As such, employers should consider offering voluntary benefits as part of a comprehensive benefits package to attract and retain the best employees.

With multiple generations involved in their workforce today, an employer must offer benefits that would cater to each of their needs. Those who are older might consider traditional benefits packages to be sufficient, but younger generations might prefer voluntary options.

Not only do these benefits allow your company to attract and retain talent that will benefit your company in the long run. For more information on how you can offer the best, affordable benefits to your employees, contact our team.

ACA Reporting Deadlines and Compliance Requirements in 2023

The Affordable Care Act (ACA) has been in effect for over a decade, but its reporting and compliance requirements continue to evolve. In 2023, businesses and employers will face several ACA reporting deadlines and compliance requirements that they must adhere to in order to avoid penalties and maintain compliance with the law. 

 

These requirements include providing healthcare coverage to employees, filing information returns with the IRS, and furnishing statements to individuals. It is essential for employers to understand these requirements and stay up to date with any changes or updates to ensure that they are meeting their obligations under the ACA.

What Are the ACA Reporting Deadlines at the Beginning of 2023 to Report on the 2022 Calendar Year?

New regulations have been finalized by the IRS, which stipulate that Applicable Large Employers (ALEs) must provide their employees with the Forms 1095-C on or before March 2, 2023. Additionally, ALEs are required to file Form 1094-C and provide copies of Forms 1095-C to the IRS by March 31, 2023 if they choose to file electronically. 

 

Employers who must file fewer than 250 returns are permitted to file on paper, but must do so no later than February 28, 2023. It is important for ALEs to meet these deadlines to ensure compliance with the Affordable Care Act (ACA) reporting requirements and avoid potential penalties.

ACA Reporting: Overview

The Affordable Care Act (ACA) mandates that Applicable Large Employers (ALEs) report whether they provided full-time employees with affordable, minimum essential coverage (MEC) that meets minimum value requirements. For employers with self-insured plans, regardless of their size, reporting must also include months of coverage for all individuals enrolled. 

 

The reporting requirements for ALEs, regardless of their funding arrangement, are fulfilled through IRS Forms 1094-C and 1095-C. This overview highlights the essential elements of ACA reporting for ALEs.

 

ACA Reporting Deadlines for ALEs

The IRS has recently made changes to the ACA reporting deadlines for Applicable Large Employers (ALEs) by finalizing new regulations that make the automatic 30-day extension permanent. This extension, which was previously available to employers who needed extra time to furnish Form 1095-C to individuals, will now be available for all future years of ACA reporting.

 

The ACA reporting deadlines for ALEs will now be as follows:

 

  • Form 1095-C: Deadline to Furnish to Individuals

Standard Due Date: January 31

Automatically Extended Due Date: March 2

(Leap Year Due Date: March 1)

  • Form 1094-C (+Copies of Form 1095-C):

Deadline to File with IRS by Paper

Standard Due Date: February 28

  • Form 1094-C (+Copies of Form 1095-C):

Deadline to File with IRS Electronically (Required for 250 or More Returns)

Standard Due Date: March 31

 

If the due date falls on a weekend or a legal holiday, the deadline is extended to the next business day.  These deadlines apply to all ALEs regardless of their plan year.

 

The IRS has also proposed regulations that would reduce the required electronic filing threshold to employers filing just 10 or more returns.  That reduced 10-return electronic filing threshold has not been finalized and therefore is not currently being enforced.

ACA Reporting: Fully Insured vs. Self-Insured Plans

The ACA reporting requirements for Applicable Large Employers (ALEs) differ based on whether their medical plan is fully insured or self-insured. Level funded plans are considered self-insured for reporting purposes as they are not fully insured. ALEs with fully insured medical plans are not required to report under §6055 in Part III of Form 1095-C. Their only reporting responsibility is under §6056, which covers Parts I and II of Form 1095-C as well as the full Form 1094-C. 

 

In contrast, enrolled employees and their dependents’ coverage information for a fully insured plan is reported by the insurance carrier on Form 1095-B, and the carrier is solely responsible for furnishing and filing the Form 1095-B coverage information and soliciting any missing dependent SSNs. ALEs with self-insured medical plans are subject to §6055 reporting and must complete Part III, in addition to Parts I and II, of Form 1095-C.

 

The following overview addresses ACA reporting obligations by employer size and funding arrangement:

ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)

IRC §6055 and §6056 Reporting

 

  • Completed via Forms 1094-C and 1095-C.
  • Employer must complete Part III of the Form 1095-C (“Covered Individuals”) for enrolled individuals.
  • If the employer sponsors both self-insured and fully insured medical plan options, the employer completes Part III only for individuals enrolled in the self-insured medical plan.

 

Important Note: “Level funded” plans are considered self-insured for these purposes.

ALE Sponsoring a Fully Insured Medical Plan

IRC §6056 Reporting Only

  • Completed via Forms 1094-C and 1095-C.
  • Employer does not complete Part III of the Form 1095-C (“Covered Individuals”).
  • Insurance carrier completes coverage information on separate Form 1095-B.

 

Non-ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)

IRC §6055 Reporting Only

  • Completed via Forms 1094-B and 1095-B.
  • Employer does not complete Forms 1094-C and 1095-C (because not subject to the employer mandate).
  • Employer information listed in Part III (“Issuer or Other Coverage Provider”) of the 1095-B.
  • Employer does not complete Part II (“Information About Certain Employer-Sponsored Coverage”) of the Form 1095-B.

Important Note: “Level funded” plans are considered self-insured for these purposes.

Non-ALE Sponsoring a Fully Insured Medical Plan

No ACA Reporting!

ACA Reporting: Controlled Groups

For an ALE that falls under the ACA employer mandate and has multiple corporate entities in a controlled group, each subsidiary or related entity in the controlled group must file a separate Form 1094-C. Each entity, also known as an Applicable Large Employer Member (ALEM), must file their own report.

Aggregated ALE Groups have additional ACA reporting obligations:

 

Form 1094-C for each ALEM must contain the following:

  • Part II, Line 21: Each ALEM must answer “Yes” to the question “Is ALE Member a member of an Aggregated ALE Group?”
  • Part III, Column (d): The “Aggregated Group Indicator” box will be checked for each month in which the controlled group existed.
  • Part IV: The “Other ALE Members of Aggregated ALE Group” section will be completed listing the names of the other related entities in the controlled group (the other ALEMs) and their EINs.

 

Forms 1095-C from each ALEM must contain the following:

 

  • The full-time employees of each EIN (i.e., each ALEM) must receive a Form 1095-C with that ALEM’s corporate name and EIN.
  • If an employee works for more than one ALEM in the Aggregated ALE Group in any calendar month, the ALEM for whom the employee worked the most hours of service in that calendar month is responsible for the employee’s Form 1095-C ACA reporting for that month.

 

It is important to note that Aggregated ALE Groups must comply with all ACA reporting requirements and that failure to do so could result in penalties.

ACA Reporting: COBRA Guidelines

Employers with fully insured plans only need to address additional COBRA-related ACA reporting requirements in the event of an employee’s qualifying event being a loss of coverage due to a reduction in hours. The appropriate coding in such a case depends on whether the employee has elected COBRA and whether the employee was in employee-only or family coverage.

 

Apart from the above requirements, self-insured plans (including level funded plans) must report coverage information completed in Part III for all months of active or COBRA coverage.

 

Part II of Form 1095-C for COBRA participants who were a full-time employee for at least one month in the year will be completed similarly for both self-insured and fully insured plans. For individuals who were enrolled in COBRA under a self-insured plan for at least one month in the reporting year but whose active coverage terminated in a previous year, the Part II coding will indicate that the individual was not an employee for any month of the year (Code “1G” in Line 14 for all 12 months).

 

Note: additional rules apply when the spouse or dependent elects COBRA separately from the employee.

Still Have Questions?

The best way for employers to remain compliant with healthcare laws is to consult with a team of professionals. Our team at Innovative HIA understands the ACA and can help you stay up-to-date on any changes to the law. 

 

Why Innovative Hia is the Gold Standard of Service

At Innovative Hia, we serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act.

We’re in the business of providing health care to everyday people, ensuring peace of mind through trust and transparency.

We pride ourselves on our personal service, speed of  implementation, and innovative approach to providing benefits coverage.

Today, we’d like to chat a bit more about the exceptional service we provide and why SBMA is, therefore, the gold standard of customer service for minimum essential coverage (MEC) insurance providers.

(Hint: Our one-stop-shop benefits portal plays a large role in our successful customer service efforts!)

Let’s dive in.

WHAT PROBLEM DO WE SOLVE?

With us, you get peace of mind, security, and the insurance your employees want at a price everyone can afford. Providing affordable benefits to your employees not only ensures you employees remain motivated and excited about work, but they also ensure you remain in compliance with the ACA.

WHAT MAKES INNOVATIVE HIA BENEFITS DIFFERENT?

Our customer service is what sets us apart. We work when you work. Our carrier partners have given us exclusive offerings to complement our medical plans, giving you the best possible price. Our quick execution and advanced approach to benefit coverage is second to none.

HOW INNOVATIVE HIA SUPPORTS THE ONBOARDING AND OFFBOARDING PROCESSES

At SBMA, we support businesses beyond providing affordable minimum essential coverage (MEC). We are proud to support the employee onboarding process so your human resources (HR) teams have more time to focus on the daily tasks that keep your business running.

This is why we offer a complete insurance solution that covers:

  • Implementation
  • Enrollment
  • Administration, and
  • Reporting

Our benefits professionals are fully equipped to support onboarding and offboarding procedures to eliminate the hassle for businesses.

How? Using our benefits portal.

OUR BENEFITS PORTAL

Employee benefits administration can be a pain for any HR department. At SBMA, we aim to simplify the process by giving you access to everything you need in one place.

Our one-stop-shop portal is proprietary and unlike any other. Our portal grants you access to all of the tools necessary to support a new hire (from beginning to end).

We eliminate the headache of unnecessary paperwork with benefits management portal access. You can:

  • Make plan changes
  • Order ID cards
  • Check a claim status online
  • Track onboarding and offboarding
  • And more

Resources are only a click away.

Besides creating a seamless onboarding process with our all-in-one portal, we also provide video tutorials for our partners. These resources provide instructions that assist navigation through the portal.

Read on to view our enrollment portal walkthrough.

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Full-Time vs Part-Time Benefits: Why It Matters

Employers need to make sure they are compliant with the Affordable Care Act (ACA) and the employer shared responsibility regulations, also known as “the employer mandate” or ALE. This means that employers must consider many factors when deciding between offering full-time vs part-time benefits, including the costs associated with providing health coverage and other employee benefits.

In this blog we’ll explore the differences between full-time (FT) and part-time (PT) benefits and why it matters for business owners.  

What is the ACA’s Employer Mandate?

The Affordable Care Act’s (ACA) Employer Mandate is a federal law requiring businesses with 50 or more full-time employees to provide health insurance coverage to those employees, or face penalties. The ACA requires employers to offer minimum essential coverage that meets certain affordability and value requirements. Employers must also comply with certain reporting requirements so the government can keep track of employer compliance with the law.

The Employer Mandate is one of the most important elements of the ACA, as it helps ensure that more Americans have access to quality health care coverage. The goal of this law is not only to ensure that employers are providing health insurance to their employees, but also to make sure those plans are comprehensive and affordable.

The ACA’s Employer Mandate requires Applicable Large Employers (ALEs) to provide their full-time employees with affordable Minimum Essential Coverage (MEC), meeting Minimum Value (MV) requirements, that covers at least 95% of the workforce.

The Employer Mandate is enforced by the Internal Revenue Service (IRS), and while penalties can be imposed if an employer fails to comply with the law, there are some exemptions that may apply. For example, employers who offer health coverage but do not meet minimum value requirements may qualify for a “hardship exemption.” Additionally, employers with fewer than 50 full-time employees are not subject to the Employer Mandate.

What is ALE (Applicable Large Employer)? 

Applicable Large Employer status is a designation given to certain employers by the Internal Revenue Service (IRS) under the Affordable Care Act (ACA). The ACA requires applicable large employers to offer health insurance coverage to their full-time employees or pay a penalty. 

An applicable large employer is any business that has at least 50 full-time employees, or a combination of full-time and part-time employees that are equivalent to at least 50 full-time employees.

What Qualifies an Employee as Full-Time?

Generally, an employee is considered full-time if they work an average of 30 or more hours per week. Certain government agencies may have specific definitions to define full-time employees, such as those that qualify for unemployment benefits. Depending on the situation, an employee may also be considered full-time if they are classified as a salaried or exempt employee, meaning they would receive a set salary regardless of the number of hours worked. 

 

Overall, being aware of an employer’s definition of full-time employment can be beneficial for both employers and employees. Knowing what qualifies as full-time can ensure that employees receive the correct benefits and employers are in compliance with any applicable regulations.

What Benefits are Generally Offered to Full-Time Employees?

Full-time employees typically receive benefits such as health insurance, vacation time, 401(k) plans, and other company-sponsored retirement plans. Some employers may also offer tuition reimbursement programs, life and disability insurance, flexible spending accounts (FSAs), and employee discounts. The specific benefits offered to full-time employees vary greatly depending on the employer and the industry. 

Additionally, many organizations are now offering mental health support, remote working options and other perks that may benefit employees in these uncertain times. 

Full-time employees must be offered benefits if the employer is subject to ALE, while part-time employees are not eligible for coverage until they meet certain hours thresholds. Employers should carefully consider how their benefits packages will affect the ACA and ALE compliance in order to avoid penalties or fines that could arise from noncompliance.

What Qualifies as Part-Time Employment and Benefits?

Part-time employment typically refers to a worker who is employed for fewer hours per week than a full-time worker. Some employers may offer part-time employees the same benefits as their full-time counterparts, including health insurance, paid time off, and retirement savings plans. However, there can be differences in the amount of benefits offered depending on the employer. For example, some employers may offer reduced health care plans or no retirement savings plan to part-time employees. In addition, some employers may cap the amount of paid time off for part-time workers. It is important for potential and existing part-time employees to know their rights under the applicable labor laws. 

Additionally, employers need to be aware of the different rules for eligibility for full-time and part-time employees. For example, if an employer offers a health plan that is limited to full-time employees but also has part-time employees who work more than 30 hours per week, they may not be eligible to receive coverage under this plan. This means that employers must be very careful when establishing eligibility criteria for their benefits plans and make sure that they are compliant with the ACA and ALE regulations.

How PT vs FT Employee Benefits Impact Retention

Employers should also consider how their employee benefit packages affect their employee retention strategies. Offering attractive benefits to full-time employees can help retain them, while providing minimal or no benefits to part-time employees may lead to high turnover rates. Employers need to assess their workforce needs and determine if it is necessary to offer benefits to part-time employees in order to maintain a healthy and productive workforce.

Things to Consider

Overall, employers must take into account the costs of providing employee benefits, as well as the compliance requirements of the ACA and ALE when deciding between offering full-time vs part-time benefits. Employers should also consider their employee retention strategies and make sure they are providing adequate benefits to ensure long-term loyalty from both full-time and part-time employees.  With proper planning, employers can create an effective benefits package that meets the needs of their workforce while remaining compliant with all applicable regulations.

The Affordable Care Act (ACA) requires employers to calculate the number of employees that qualify as full-time and full-time equivalent for each month in order to determine if they are an Applicable Large Employer (ALE). This calculation involves taking the total number of full-time designated employees, plus all non-full-time designated employees’ hours for the month and dividing by 120. The resulting number is then added to the full-time employee count to determine ALE status. 

To ensure accurate calculations, employers can outsource their ACA compliance process to a service provider who will measure workers’ hours of service and calculate FTEs and ALE status on their behalf. Accurately calculating ALE status is essential for employers to minimize potential penalty exposure from the IRS.

To Sum It Up

The decision to provide full-time or part-time benefits to employees is a complex one that requires careful consideration of various factors such as cost, compliance with ACA and employer shared responsibility regulations. Employers should look into their options and evaluate which option is best for them in order to ensure they are providing their employees with quality benefits. Ultimately, offering the right benefits to employees can help businesses attract and retain talent.

If you’re a business owner that needs help navigating FT/PT employee benefits, reach out to us today!

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Received an ACA Penalty from the IRS? Here’s What to Do

The Affordable Care Act (ACA) has a number of different mandates and regulations, which can carry hefty penalties if you don’t comply. If you receive an ACA penalty, it’s important to understand what to do in order to minimize the impact of this financial burden. In this blog post, we will discuss the types of ACA penalties that you may face, as well as how to navigate the process of dealing with them. We will also provide tips on how to avoid ACA penalties in the future. 

 

If you are a business owner trying to remain compliant, this blog post will help you take the necessary steps to stay up-to-date with your obligations under the ACA and avoid costly penalties in the future.

What are Some Reasons Why a Business Owner Could Receive an ACA Penalty?

There are a few reasons why a business owner may receive an ACA penalty:

  1. Not Offering Qualified Health Insurance Coverage – The employer mandate requires employers with 50 or more full-time employees provide qualified health insurance coverage to at least 95% of their full-time employees. If a business fails to offer this coverage, they may be subject to an ACA penalty.

 

  1. Not Providing Affordable Coverage – Employers must also provide affordable coverage to at least 95% of their full-time employees. If the employer fails to meet this requirement, they may be subject to an ACA penalty.

 

  1. Failing To Offer Dependent Coverage – The ACA requires employers to offer dependent coverage up to the age of 26. If an employer fails to provide this coverage, they may be subject to a penalty.

 

  1. Not Adequately Reporting ACA Information – Employers are responsible for accurately reporting employee health insurance information on their taxes and other forms. Failure to do so can result in an ACA penalty.

 

  1. Offering Coverage to Employees Who Are Not Eligible – Employers must also make sure that all of their employees who are eligible for coverage are offered coverage, or else they may be liable for an ACA penalty.

 

  1. Failing To Comply With State Regulations – Some states have their own requirements when it comes to providing employee health insurance. If a business fails to comply with these regulations, they may be subject to an ACA penalty.

 

No matter what the reason, it is important for employers to understand their obligations under the ACA so that they can avoid penalties. By understanding the law and taking steps to ensure compliance, employers can avoid costly ACA penalties.

By following the guidelines set forth by the ACA, employers can ensure that they are compliant and avoid having to pay unnecessary penalties. It is important for businesses to stay up-to-date on all of their responsibilities under the law in order to remain compliant and avoid costly fines or penalties. Employers should consult with an experienced attorney or tax specialist to ensure that they are in compliance with the ACA.

The consequences of not complying with the ACA are serious. Business owners should make sure that they understand their responsibilities and take steps to ensure compliance in order to avoid costly penalties or fines. An experienced attorney or tax specialist can help business owners stay up-to-date on all of their obligations under the law.

Additionally. . . 

There are many other reasons why a business owner may receive an ACA penalty, and it is important to understand them in order to avoid them. Consulting with an experienced attorney or tax specialist can help employers understand the law and ensure that they remain compliant. By doing so, businesses can avoid costly penalties while providing quality healthcare coverage for their employees.

The Affordable Care Act is a complicated law and understanding it can be difficult. However, by taking steps to make sure that they are compliant with all of the provisions, employers can avoid costly penalties and fines. By consulting with an experienced attorney or tax specialist, employers can make sure that they remain compliant while providing quality health care coverage to their employees.

By understanding their obligations under the ACA, businesses can ensure that they remain in compliance and avoid any unnecessary penalties or fines. With the help of an experienced attorney or tax specialist, businesses can make sure that they are up-to-date on all of their responsibilities under the law and remain compliant with the ACA.

What to Do if You Receive a Penalty

If you’re a business owner and have received an ACA Penalty from the IRS, take the following steps:

  1. Contact your tax advisor. Your tax advisor should be able to provide advice about how to proceed with this penalty and whether it can be appealed or reduced in any way.

 

  1. Review your employee records. The penalty could be the result of incorrect or incomplete information about your employees, so make sure all records are up-to-date and accurate.

 

  1. Determine how you’ll pay the penalty. You may have to pay the penalty in a lump sum or over several payments, depending on how much is owed.

 

  1. Contact the IRS to discuss payment options. The IRS may be able to assist you in setting up a payment plan for paying the penalty, or they may be willing to work out an alternative arrangement.

 

  1. Establish a compliance program going forward. Once the penalty is paid and any necessary documents are filed, it’s important to ensure your business is compliant with the ACA going forward. Work with your tax advisor or another specialist to set up a compliance program that will help you avoid penalties in the future.

 

  1. Appeal if necessary. If you feel the penalty was issued incorrectly or unfairly, you can appeal it by filing an application for reconsideration with the IRS. Your tax advisor can help you determine if appealing is a viable option for your situation. 

 

By following these steps, you can ensure that your business is compliant with the ACA and any penalties are handled appropriately.

In Summary

The key to avoiding future ACA Penalties is understanding how the law applies to your business and making sure all of your employee records are accurate and up-to-date. Additionally, establishing a compliance program and regularly reviewing your employee records is essential to avoiding future penalties. Finally, be sure to contact the IRS if you receive a penalty and consider appealing it if necessary. With these steps in place, you can help ensure that your business remains compliant with the ACA going forward.

By taking steps to make sure that their business is complying with all of the provisions of the law, employers can avoid costly penalties and fines. The best way for employers to make sure that they remain compliant is to consult with a professional like our team at Innovative HIA, who understands the ACA and can help them stay up-to-date on any changes to the law.

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Which Industries are Most Susceptible to ACA Penalties from the IRS?

While all organizations are susceptible to receiving IRS penalties, some industries are particularly vulnerable. These industries include home healthcare, staffing, restaurant, and construction industries.

Why are these industries under fire from the IRS? Let’s take a look.

These Industries Typically Have a High Number of Hourly Workers

Home healthcare, staffing, restaurant, and construction industries have a high percentage of hourly workers with varying schedules. This can make it difficult for employers to determine which employees are ACA full-time and require an offer of health coverage.

HR is often a non-centralized function, making it challenging to gather the data necessary for compliance.

High Staff Turnover Rates

These industries are often associated with a high employee turnover rate. This can make it difficult for employers to track employees as their benefits.

Workforces that Disproportionately Decline Health Coverage

Home healthcare, staffing, restaurant, and construction industries generally employ workforces that are more likely to decline offers of health coverage benefits. Employers may struggle to track declinations and face ACA penalties from the IRS.

How Can Organizations Ensure They Are Complying with ACA Requirements?

Employers can ensure they are ACA compliant by determining the accurate full-time and part-time status of employees under ACA. Employers may experience significant ramifications for misclassifying employees. 

Additionally, employers should familiarize themselves with their requirements under the ACA’s Employer Mandate. For example, employers with 50 or more full-time employees, or ALEs, must:

  • “Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and 
  • Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability.”

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For more information, read on for the full article from the ACA Times.

These Industries are Most at Risk for ACA Penalties From the IRS

The home healthcare, staffing, restaurant, and construction industries are under fire from the IRS for failing to comply with the ACA. Organizations within these industries have been shocked to receive ACA penalty notices from the IRS that are in the millions of dollars.

Of course, all types of organizations – hospitality, manufacturing municipal governments, non-profits, and other industries – are receiving IRS penalty notices too. However, the four industries mentioned above seem to be getting more than their fair share.

Here’s why these industries are so susceptible to receiving ACA penalties:

  • HR is often a non-centralized function, making it challenging to gather the data necessary for compliance
  • They have a high percentage of hourly workers with varying schedules, making it difficult to determine who is ACA full-time and requires an offer of health coverage
  • They employ workforces that disproportionately decline offers of health coverage benefits, creating a heavier employer burden in tracking declinations
  • Employees come and go during the year with high staff turnover rates, increasing the employer’s burden to track all such employees
  • Per diem piece work and multiple rates of pay complicate the determination of pay rates and affordability
  • Reliance on payroll systems (or other software programs) that collate data and submit Forms 1094-C and 1095-C often result in a failure to let you know when the data used is inaccurate, which will trigger ACA penalties

Determining the accurate full-time and part-time status of employees under the ACA is arguably the first, and most important, step for ACA compliance. There are real ramifications for inaccurately classifying employees. 

Under the ACA’s Employer Mandate, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees to:

  • Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and 
  • Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability

ALEs that fail to comply with these requirements can be subject to Internal Revenue Code (IRC) Section 4980H penalties.

For example, let’s look at an employer that improperly classifies an employee as not full-time and does not make an offer of insurance. That employee goes to a government marketplace exchange to purchase health insurance and receives a Premium Tax Credit (PTC) that helps subsidize the cost of the health insurance purchased on the exchange. This can trigger the issuance of an IRS Letter 226J penalty notice under IRC 4980H. 

The penalty assessment will be applied to every full-time employee working for that employer during the course of the tax year, not just the employee obtaining the PTC. For the 2022 tax year, that penalty could be as high as $275,000 for every 100 employees.

The first step in the full-time status evaluation is determining which measurement method is best for your organization.

For organizations made up primarily of variable-hour employees, you will want to implement the Look-Back Measurement Method. If your workforce has mostly full-time employees and non-varying schedules, the Monthly Measurement Method will be best.

The most expedient step for employers is to get your ACA Vitals score. This will help determine your risk of receiving IRS penalties by analyzing your unique workforce composition.

Such a review can reap dividends by helping employers avoid significant ACA penalties from the IRS, particularly if those organizations have not been filing ACA-required information annually with the IRS. These organizations should file this information as soon as possible to avoid receiving an IRS penalty notice and to minimize potential penalties. 

The IRS is currently issuing warning notices to employers identified as having failed to file and furnish Forms 1094-C and 1095-C for the 2019 tax year via Letter 5699. If you have received one, contact us to have the penalty reduced or eliminated. We’ve helped our clients prevent over $1 billion in ACA penalty assessments.

If you are part of the home healthcare, personnel staffing, restaurant and construction industries, or any industry that relies on a significant mix of full-time and part-time employees, you are at serious risk of being penalized for not complying with the ACA.

We see daily how the IRS is enhancing its methods for identifying employers that are not complying with the ACA and sending them penalty notices. 

We regularly see the surprise and shock expressed by organizations that receive these penalty notices, many of them containing significant penalty assessments. 

We also see how these organizations could have avoided these penalty assessments by receiving help from experts that understand ACA and IRS regulatory requirements and know how to successfully meet those regulatory requirements.