2020 ACA Penalties and Parameters

2020 ACA Penalties and Parameters

While HR teams are busy with 2019 reporting season, it’s important to keep 2020 ACA requirements in mind. With the IRS actively assessing potential penalties, keeping a close eye on changing parameters is essential.

For 2020, employers must continue to:

  • Provide affordable coverage that provides minimum value to 95% of full-time employees for each calendar month of the year.
  • File accurate and complete Forms 1094 and 1095 with the IRS, as well as provide timely and accurate employee statements (Form 1095) to employees.
  • Actively manage employee eligibility and compliance under the employer mandate.

Important note: The IRS will not assess a penalty for failing to furnish a Form 1095-B to responsible individuals in cases where conditions are met. Read our Reporting Readiness Blog for more information.

Important note for controlled groups (i.e., companies that have multiple common ownership or parent-subsidiary relationships): All companies in a controlled group are considered a single employer for the purpose of ACA reporting. Therefore, it’s important to maintain compliance for all the included entities within the group to avoid penalty risk.

 Key ACA Parameters and Penalties for 2020

*Employers who correct reporting errors or submit returns before August 1, may reduce their potential per form penalties.

Why you Should Pay Attention
The IRS continues to assess potential penalties for previous reporting years. Letter 226-J, distributed by the IRS has included a reporting assessments for individual companies in the millions! The IRS also assesses penalties for late Letter 226-J payments, and any large employer that does not respond to either Letter 226-J or Letter 227. The IRS is indicating that they will also pursue liens against the business if penalties aren’t paid.

It’s important to remember that this risk can be managed. Selecting a vendor who provides a system, tools and dedicated account management support to manage end-to-end ACA compliance is one of the most important decisions a company can make today. Not all ACA solutions have figured it out. The good news is, Health e(fx) was built from the ground up to overcome this challenge.

Health e(fx) continues to closely monitor changes to the ACA and reporting requirements and will keep you updated on healthcare reform. Our system was specifically designed to adapt to continuously changing healthcare regulations, and to handle even the most complex data sets. Read our free e-book on ACA best practices for complex employers here.

We’re leading through change, providing you with data insights that will help you make the best decisions for your business and your employees.