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Congress increases penalties for failing to file ACA-required information reports

July 29, 2015

By Gary B. Kushner, SPHR, CBP, President and CEO of Kushner & Company

As part of the ACA, starting in January, 2016 for the 2015 calendar year, applicable large employers (ALEs, that is, employers with 50 or more full-time equivalents) are required to distribute individual 1095-B or 1095-C reports to all full-time employees, and to file all the individual reports to the IRS, covered by the applicable 1094-B or 1094-C report. Fully insured employers with fewer than 50 full-time equivalents (FTEs) must ensure that their carrier distributes the 1095-B to all full-time employees, and if self-funded, those same less-than-50-FTE employers must file the reports themselves. Previously, the penalty for failure to file was $100 per missed return, with an annual cap on the penalty of $1.5 million.

Under the Trade Preferences Extension Act passed by Congress on June 29, 2015, the penalty for nonfilers more than doubled to $250 per missed return, and the annual cap doubled to $3.0 million. If the failure relates to both the payee statement and the IRS information return, the cap is doubled again to $6.0 million.

If you have not done so already, you should immediately begin reviewing whether your organization (or your insurance carrier) is required to prepare, distribute, and file the returns. If so, you should already have built processes to collect the required data in order to prepare the returns for each month of the 2015 calendar year. Don’t wait until January to try to do this—the data collection requires not just information about your employees, but also about spouses and children covered by the plan, including Social Security numbers and dates of birth.

This is a good time to recall the Boy Scouts’ motto: “Be Prepared.” 

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