The Affordable Care Act aims at revolutionizing the healthcare system in America. This is to ensure people belonging to the lower income group get access to adequate medical facilities. The enactment lays down clear-cut rules which all entrepreneurs in the country need to follow. Those proprietors who fail to comply with such stringent requirements are liable to harsh penalties. The Act classifies such businessmen into two distinct categories. Those hiring more than 50 individuals in any calendar year fall under the category applicable large employers. They need to fulfill a very important obligation. The owners need to provide minimum healthcare coverage to workers on their payroll. They should extend the same facilities to their family members. This is known as ‘Minimum Essential Coverage.’
What ACA reporting penalties are entrepreneurs liable to if fail to meet their obligations?
Under the Act, such entrepreneurs need to comply with certain reporting requirements with the Internal Revenue Service (IRS). This is necessary for them to prove they have been successful in meeting their obligation as per the ‘Minimum Essential Coverage.’ Those who fail to do so are liable to the following 4 important penalties:
An entrepreneur needs to meet his/her responsibility to pay under ‘Offer Minimum Essential Coverage (MEC)’ clause. However, such a businessman fails to do so, he/she is liable to a fine of $2,320 for every worker on his/her payroll. This penalty is liable at any month of the tax year where he/she doesn’t offer the amount under this clause to 95% of his/her workforce. Such employees need to be full-time members. It is even applicable if one of these individuals receive a premium credit for buying insurance policies from the market. This one of the most important ACA reporting penalties proprietors should be aware of.
Every employer is responsible for providing adequate healthcare coverage to people they hire. The value of such medical insurance should come under certain provisions of the Affordable Care Act. These are clauses relating to affordability and the amount which constitutes to a minimum value. Proprietors who fail to meet this obligation is liable to a fine of $ 3,480 for every worker on their payroll.
- The penalty for not filing before the due date
As per the provisions of the Affordable Care Act, all entrepreneurs need to file ‘correct information returns’ within specific due date. For the assessment year 2018, this deadline on 1st August 2019. Failure to comply with this provision will attract a penalty of $270 for every return.
- Not providing Form 1095-C
Every business owner is under an obligation to give a payee statement to all their workers. However, if they fail to do so, they a liable to a fine of $270 for every return they have to file.
Employees need to comply with the provision of the Affordable Care Act. This enables them to conduct their business smoothly. Otherwise, they become liable to pay any one or all of above 4 ACA reporting penalties. This is something which they obviously want to avoid at all costs.