ACA Employer Penalties Could Reach $31 Billion this Year

Report says reporting requirements may trip up otherwise compliant businesses.

$31 billion is a lot to repeal and replace.

That’s how much employers might pay in penalties to the federal government for not complying with the health insurance coverage requirements of the Patient Protection and Affordable Care Act, or ACA, according to a new report from Accenture, the Chicago-based management consulting firm.
The ACA, which became law in 2010, requires employers with more than 50 employees to offer health insurance benefits to their workers. The “employer mandate” went into effect in 2015. This year, the law requires all qualifying employers to offer health benefits to at least 95 percent of their workers.
In its report, Accenture cited the Congressional Budget Office’s estimate that non-compliant employers will face $21 billion in penalties this year for not making health benefits available to their employees as required by the ACA. However, Accenture said another $10 billion may be added to that total from what it called “unintentionally non-compliant” employers.
The report defined “unintentionally non-compliant” employers as qualifying businesses that offer health benefits to workers but that fail to report or adequately report their compliance with the mandate to the Internal Revenue Service.
Employers must document to the IRS that they made health benefits available to at least 95 percent of their employees who worked 30 or more hours per week in 2016. Then they must document to the IRS that the benefits met two tests. First, the benefits must meet the ACA’s definition of minimum essential coverage, or MEC. That means the health plan covered at least 60 percent of an employee’s medical costs. Second, the health benefits must meet the ACA’s affordability requirement. That means an employee’s share of a health plan’s premiums didn’t exceed 9.5 percent of his or her household income.
“Because employers have not yet incurred penalties, there is limited awareness of the federal reporting requirements,” Accenture warned in the report.
The firm recommended that employers, if they haven’t already, implement an ACA employer mandate compliance program or system that tracks and reports compliance on a monthly basis on an Employer Identification Number, or EIN, level.