Increased Penalties for Non-Compliance with ACA Reporting Requirements

As a valued Marshall & Sterling client, we want to alert you of a new law which drastically increases penalties for insurers and employers that fail to comply with the new Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting requirements first due in 2016.

The Trade Preferences Extension Act of 2015, signed into law by President Obama on June 29, increases tax penalties for failing to file or filing incorrectly under the Internal Revenue Code by 150 percent. What was previously a $100 per return penalty with a $1,500,000 annual cap is now a $250 per return penalty with a $3,000,000 annual cap. Additionally, the penalty for intentionally failing to file was increased from $250 to $500 for a single return.

The new penalties will be effective for ACA reporting returns and statements required to be filed in 2016 for the 2015 calendar year. You can access the full Act here and a chart outlining the different changes and new penalty amounts here.

As a reminder, two new reporting requirements were added to the Internal Revenue Code by the ACA:

  • Section 6055: Requires insurers and self-insured plan sponsors to file reports with the IRS to verify whether an individual had MEC during a given calendar year to satisfy the Individual Mandate.
  • Section 6056: Requires an "applicable large employer" to file reports with the IRS verifying whether it offered minimum value and affordable coverage to full-time employees and their dependents in a given calendar year to satisfy the Employer Mandate. *Note: Reporting requirements are their own separate, free-standing requirement under the ACA and all employers with 50 or more FTEs in 2014 will be required to report in early 2016 on 2015 calendar year data, regardless of eligibility for 50-99 Transition Relief from Section 4980H (Employer Mandate) penalties.

The first set of 1095-C forms (statements for 2015) must be furnished to employees no later than February 1, 2016 (January 31, 2016, being a Sunday). Reporting returns must be filed with the IRS no later than February 29, 2016, or March 31, 2016, if filed electronically. Employers filing over 250 1095-C forms are required to file electronically, in accordance with IRS multi-part electronic filing procedures.

At Marshall & Sterling, we have an ACA tracking and reporting tool available to assist our clients with meeting these complex new requirements, which we would be happy to discuss with you if you are interested.  

As always, please do not hesitate to reach out with any questions.