Increasing Penalties for Non-compliance with Obamacare in 2018

Today, President Trump signed an Executive Order that ended the Affordable Care Act’s (ACA) cost-sharing reduction payments to insurance companies.  The payments were added by President Obama to entice the insurance companies to add policies to the federal and state exchanges.  Since Congress did not appropriate funds for the CSR payments (estimated at $7 billion annually), the White House stated that it cannot lawfully make the CSR payments any longer.   This does not affect the tax credits individuals receive through the Healthcare Exchange, but will affect the profitability of the insurance carriers offering Exchange policies.  The ACA may be falling apart, but it is still the law of the land for employers.

In mid-September Congress came back into session, and was unsuccessful in attempts to repeal and replace Obamacare.  President Trump then issued an Executive Order directing agencies to minimize the ACA regulatory burden, but only Congress can repeal the ACA.  So, businesses are left with a continued obligation to comply with the Affordable Care Act, or face escalating penalties.  Each year, the penalties for failing to comply with the ACA’s employer shared responsibility provision (“pay or play”) keep escalating.

An applicable large employer (ALE) is an employer that has at least 50 full-time employees, including full-time equivalents (FTEs).  An ALE will owe penalties to the IRS for the calendar year 2017 if it fails to offer group health insurance to employees, or offers group health insurance that does not meet the ACA requirements of affordability or minimum value.  Read the IRS Q & A Section on Shared Responsibility.

Penalty Option 1 – An ALE does not offer group health insurance to at least 95% of full-time employees (and their dependents) and at least 1 employee receives a premium tax credit to purchase an individual policy on the federal Health Insurance Marketplace.  The employer pays a penalty of $2,260 per full-time employee, minus any credits available to the employer.

Penalty Option 2 – An ALE offers coverage to at least 95% of its full-time employees (and their dependents), but employees are not offered coverage that is affordable or does not meet the minimum value requirements, and at least one full-time employee receives a premium tax credit to purchase individual coverage through the federal Health Insurance Marketplace.  The employer pays a penalty of $3,390 for each full-time employee that received a premium tax credit.

In addition, ALE’s have mandatory reporting requirements.  Applicable large employers (ALEs) will be required to file Forms 1094-C and 1095-C with the IRS no later than February 28, 2018 (or April 2, 2018 if filing electronically) and ALEs will be required to furnish a Form 1095-C to all full-time employee by January 31, 2018.

Consultstu LLC provides fractional HR services to small/mid businesses that lower operational costs, improve business processes and maintain compliance. We deliver customized HR and safety solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit


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