The primary reasons many businesses supply their employees with a health insurance policy are to promote a healthy workplace and keep workers happy and productive. But now that healthcare coverage is required of many businesses, you have another reason: The IRS can fine you for failing to comply with the law.
If you’re an Applicable Large Employer (ALE) with 50 or more full-time employees, you must meet the Employer Shared Responsibility Provisions (ESRP) of the Patient Protection and Affordable Care Act (also known as the employer mandate). The health insurance plan must meet minimum standards of coverage and affordability.
But what if you fail to comply with the mandate? The IRS can and does increase penalties each year, and for 2023 the IRS website indicates the following amounts will be charged to businesses who are out of compliance:
“An applicable large employer that fails to offer minimum essential coverage to 95% of full-time employees (Section 4980H(a) penalty): 2023 penalty is $2,880 per full-time employee if only one full-time employee receives subsidized coverage through the Exchange or Marketplace, a 4.7% increase from the $2,750 amount for 2022.
An applicable large employer that fails to offer affordable or minimum value coverage (Section 4980H(b) penalty): 2023 penalty is $4,320 per full-time employee who receives subsidized coverage through the Exchange or Marketplace, a 5.2% increase from the $4,120 amount for 2020.”
Hopefully, your busines is in full compliance, but of course the IRS needs to know that. Use Forms 1094-C and 1095-C to report your status to the agency before the deadlines of February 28 (if mailing paper copies) or March 31 (if filing electronically). For more information on reporting your status correctly, call one of our representatives so that you can be sure of your requirements.
And if you business is growing, and soon to surpass 50 full-time employees, that’s great news. Give us a call and we’ll help you learn everything you need to know about becoming an Applicable Large Employer.