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IRS Healthcare

Key Provisions of the Affordable Care Act

President Obama signed the Patient Protection and Affordable Care Act (ACA) on March 23, 2010.  The ACA puts into place comprehensive health insurance reforms designed to ensure that quality healthcare is affordable and accessible for all Americans.  The law is cumbersome and confusing, leaving many companies and individuals uncertain as to what steps they must take to comply with the Act’s legal requirements.   

While technically not a tax bill, the ACA contains a significant number of tax provisions.  These provisions, which are administered by the IRS, set forth new obligations and reporting requirements and impose tax penalties upon businesses and individuals that fail to comply with ACA requirements.   Given the complexity of the Act and the potential for significant penalties, businesses and individual taxpayers in the Maryland area who have questions about the law should seek advice from an experienced tax law attorney.  

ACA Requirements for Large Employers 

Under the ACA, employers with 50 or more full-time equivalent employees (called applicable large employers or ALEs) are required to offer affordable  “minimum essential coverage” that provides “minimum value” to their full-time employees.  Applicable large employers who fail to meet the ACA coverage requirements may be required to make a “shared responsibility payment” to the IRS.  The shared responsibility payment is often referred to as the “play or pay” penalty or “employer mandate.”   If an applicable large employer fails to offer minimum essential coverage or offers coverage to fewer than 95% of its full-time employees, the employer may be subject to an employer shared responsibility payment generally equal to $2,000 multiplied by the number of full-time employees (minus up to 30 employees).

The ACA also establishes annual information reporting responsibilities for ALEs. ALEs must report information about the health care coverage they offer to their employees to the IRS as well as to their full-time employees.  ALEs that fail to file an annual information return with the IRS setting forth what health insurance they offered to their employees are subject to strict penalties.  For instance, for returns filed after December 31, 2015, the penalty for failing to file an information return with the IRS will generally be $250 for each return in which a failure occurs, up to a maximum of $3,000,000.

ACA Requirements for Small Employers 

Employers with 50 or fewer full-time employees or equivalents are generally considered to be “small employers” under the ACA.  Unlike large employers, small employers are not subject to the ACA’s play or pay penalty.  Small employers, however, may be required to report the value of the health insurance coverage they provide to their employees on the employee’s W-2 Form.  Additionally, where a small employer provides self-insured coverage to employees, the employer must file an annual return with the IRS reporting certain information about the coverage.  The ACA also offers small employers the opportunity to purchase health coverage for their employees through the Small Business Health Options Program (SHOP) and certain small employers may be eligible for a small business health care tax credit. 

A Maryland Business Tax Lawyer at Thorn Law Group Can Help You Comply with the ACA

Thorn Law Group works with employers throughout the Maryland region and beyond to structure employee benefit programs that meet the ACA’s requirements.  We also advise individual taxpayers on how to best comply with the ACA and assist clients with any enforcement proceedings or penalties.

To learn more about how Thorn Law Group can clarify your responsibilities under the ACA and help you to develop effective compliance strategies, contact our Maryland satellite office today.


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