Source: https://www.lyonsinsurance.com/blog/%C2%A74980h-offer-requirements-and-associated-penalties/
Timestamp: 2019-12-16 02:31:11
Document Index: 102597819

Matched Legal Cases: ['§4980', '§4980', '§4980', '§4980', '§6056', '§4980', '§4980', '§414', '§4980', '§6056', '§4980', '§4980', '§4980', '§4980', '§4980', '§4980', '§4980']

§4980H Offer Requirements and Associated Penalties - Lyons Companies
Home » Blog » §4980H Offer Requirements and Associated Penalties
Briana Walsh2019-11-11T10:53:30-05:00
As the IRS continues to actively enforce the employer shared responsibility payments and associated employer reporting requirements, we are reminded that the employer mandate under §4980H of the ACA remains in effect and requires compliance to avoid potential penalties. All applicable large employers (ALEs) are subject to §4980H offer of coverage requirements and §6056 employer reporting requirements. ALEs who fail to comply with §4980H offer of coverage requirements and report accordingly to the IRS via Forms 1094-C and 1095-C may find themselves subject to penalties (employer shared responsibility payments). Following is a summary of the offer of coverage requirements under §4980H and the associated penalties for employers who fail to comply.
When more than one entity is involved due to common ownership or shared services (e.g. a controlled group or affiliated service group under §414 rules), the entities must aggregate FTEs to determine the average for the previous calendar year. If when combined the entities average 50 or more FTEs, then each entity is considered an ALE, subject to §4980H offer of coverage requirements and §6056 employer reporting requirements for the following calendar year.
§4980H Offer of Coverage Requirements
For more details about affordability requirements and use of an affordability safe harbor, see our issue brief on affordability found at http://benefitcomply.com/%E2%80%A2-affordability-considerations/.
Percentage 9.56% 9.66% 9.69% 9.56% 9.86% 9.78%
§4980H Penalties (Employer Shared Responsibility Payments)
§4980H(a) $2,080($173.33/mo.) $2,160($180/mo.) $2,260
($188.33/mo.) $2,320($193.33/mo.) $2,500
($208.33/mo.) $2,570
($214.16/mo.)
§4980H(b) $3,120($260/mo.) $3,240($270/mo.) $3,390($282.50/mo.) $3,480($290/mo.) $3,750($312.50/mo. $3,860
($321.66/mo.)
Penalties apply on a monthly basis, so penalties will constitute 1/12 of the annual penalty for each month that the employer fails to satisfy §4980H requirements and a full-time employee is enrolled through a public Exchange and qualifies for a tax subsidy.
ALEs are required to self-report to the IRS regardless of whether §4980H requirements were met for the calendar year. The reporting is done via a Form 1094-C and a Form 1095-C for each employee who was full time for at least one month. The ALE indicates whether MEC was offered to 95% or more of full-time employees on Form 1094-C (Part III, Column (a)). Specific offer of coverage information for each full-time employee, including information about whether the offer provided minimum value and was affordable, is reported on Lines 14 through 16 of Form 1095-C. Employers who fail to report timely, correct information to the IRS and provide copies of Form 1095-Cs to employees may face penalties of up to $270/form.
The IRS then reconciles the employer reporting with personal tax returns and data from the public Exchanges to determine which ALEs may owe penalties. If it appears that an ALE owes penalties, the ALE will receive a Letter 226J from the IRS. More information about the IRS’ collection process via Letter 226J may be found at http://benefitcomply.com/wp-content/uploads/2017/11/IRS-Letter-226J.pdf.
Compliance IRS §4980H(b)