Search
  • Total Business Team

ACA 2019-2020 Penalty Overview

Updated: Mar 20, 2020

The IRS has put in place several penalties for companies with 50 or more full-time or full-time equivalent employees that do not comply with the ACA.

According to Cigna, the 2020 penalty is $2,570 per full-time employee, excluding the first 30 employees. Below are a few example situations that may result in a penalty for your organization:


Penalty #1: Employer Shared Responsibility Payment for Failure to Offer Minimum Essential Coverage

Applies if (a) in any month in the tax year, minimum essential coverage (MEC) is not offered to at least 95 % of a company's full-time employees (and their dependents), and (b) if at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace. Annualized penalty for 2020 is $2,570 x (# ALL full-time employees - 30)


Penalty #2: Employer Shared Responsibility Payment for Failure to Offer Affordable Minimum Essential Coverage that Provides Minimum Value

Coverage is offered to at least 95 % of its full-time employees (and their dependents), but at least one full-time employee receives a Premium Tax Credit to help pay for coverage through the Marketplace, which may occur because the employer did not offer coverage to that particular employee or because the coverage the employer offered that employee was either unfordable (more than 9. 78% of household income) or did not provide minimum value. Annualized penalty for 2020 is $3,860 x (# of Full Time employees)


Penalty #3: Failure to file correct information returns

If the return is not filed by the late filing August 1 deadline, the full penalty is assessed per applicable individual return not filed. Penalty for 2020 is $270 x (# of applicable individuals not filed)


Penalty #4: Failure to furnish correct payee statements

If the ACA-mandate health insurance information is not provided to employees by the deadlines established by the IRS, the penalties are assessed per applicable individual not receiving this information. Penalty for 2020 is $270 x (# of applicable individuals not receiving information)


For more information, please reach out to a tax and/or employee benefit professional. Or, contact us today if you are in need of a resource that can assist with ACA-related complexities. A professional employer organization (PEO) can be a great asset.

35 views0 comments