Are You Liable for Shared Responsibility Payments?

With all the recent changes to employment due to the global pandemic, navigating ACA compliance can be challenging. ACA noncompliance may lead to shared responsibility payments. Businesses with 50 or more full-time employees must offer affordable, minimum essential health coverage.

How can your business avoid tax penalties from the IRS?

The first step to avoiding potential shared responsibility payments is to make sure your business stays compliant with the ACA shared responsibility requirement. While this may seem simple, there are few distinctions to be aware of, including determining full-time employment status and full-time equivalents and identifying the minimum value requirements.

If employers do not cover at least 95% of full-time employees and their dependents, the employer will be subject to a shared responsibility payment. 

If a full-time employee receives a premium tax credit because they were not offered coverage, the coverage was not affordable, or the minimum value was not provided, the employer may also be subject to a shared responsibility payment.

Once you have identified how to stay compliant with the ACA shared responsibility requirements, ensure your reporting is accurate and timely.

Applicable Large Employers (employers with 50 or more employees) are required to file information returns with the IRS, Forms 1094-C and 1095-C. These forms will inform the IRS of the employers that owe shared responsibility payments.

To mitigate the risk of receiving a letter from the IRS for shared responsibility payments, employers should carefully review and complete the forms above.

If you do receive a shared responsibility payment letter from the IRS, the employer has 30 days to respond. If you do need more time to gather your information, the IRS may be able to extend the 30 days deadline. Either way, be sure to respond or ask for an extension as quickly as possible.

If you are required to pay a shared responsibility payment be sure to consult a lawyer to ensure your reporting is accurate. At SBMA, we want to ensure you remain compliant with all ACA requirements. If you receive a letter from the IRS in 1094/1095 filing that we completed, we will refile your forms, free of charge.

Contact us today to learn more.