Robert Sheen
American employers must deal with new IRS reporting obligations and the possibility of hefty penalties because of the Affordable Care Act, Robert S. Sheen, Editor of the ACA Times and President of First Capitol Consulting, said in a keynote address at the Workplace Benefits Summit in Orlando, Florida.
“Because of the Affordable Care Act, millions of Americans now have quality health insurance. But the "healthPlanNetworkId">ACA has also introduced complex regulatory requirements for employers, and the risk of costly penalties for failing to comply,” Mr. Sheen told the human resources professionals attending the conference.
“The Treasury Department expects Affordable Care Act penalties paid by employers to total $117 billion,” Mr. Sheen said. “To comply with ACA rules and reporting requirements, companies now have to collect a lot of new personal information about their employees, and often about employees’ families.”
Companies with 50 or more employees should have started in January of this year gathering the data they will need to file with the IRS no later than next March 31, Sheen told conference attendees.
“This means that the people in your Human Resources, Payroll, Risk Management and Information Technology departments have to work together to handle new and unfamiliar responsibilities, and that’s a real challenge for many companies,” he said.
Many employers have barely begun the process, he said, and could face penalties of $250 per employee, to a maximum of $3 million – or worse, $500 per employee with no cap if the IRS believes a company has intentionally disregarded the filing requirements. Fortunately, the IRS offers “transition relief” for companies making a good-faith effort to comply, he noted.
Sheen warned that employers need to be aware of the risk that an employee who is eligible for company-sponsored health insurance may nevertheless decide to buy coverage on a state or federal “exchange” or online marketplace, in order to obtain subsidized coverage.
If just one full-time employee receives a premium subsidy from an exchange, the employer faces a potential annualized penalty of $2,080 times the total number of full-time employees for failing to offer coverage in 2015. Thus for a company with 200 such workers, the penalty – which is not tax-deductible – could be several hundred thousand dollars.
In addition serving as Editor-in-Chief of the “The ACA Times,” Mr. Sheen heads First Capitol Consulting, based in Los Angeles, is one of the nation’s leaders in advising Fortune 1000 and middle-market companies in cost-effective implementation of the Affordable Care Act. The firm also advises its more than 3,000 clients on employment-related tax credits.
Attended by more than 700 industry professionals, the Employment Benefits Summit is presented annually by Employee Benefit Adviser Magazine and the Workplace Benefits Association.