ACA Compliance - Will You Be Penalized at Tax Time?

February 9, 2015

ACA Compliance - Will You Be Penalized at Tax Time?

Flash forward to tax time next year. Will your business be ACA compliant? Will you owe penalties? 2015 is here and now is the time to make sure your health benefits are ACA bullet-proof. Wondering where to start? Here is a checklist to help.

ACA Compliance Checklist

  • We understand our company’s ACA compliance requirements, and potential penalties

  • We’ve audited our current health benefits

  • We have someone in charge of ACA compliance

  • We’ve educated employees about any health benefit changes

Next, let’s look at each of these items in closer detail.

Understand Your Company’s ACA Compliance Requirements

The Affordable Care Act impacts employers differently. Most of these differences depend on how many employees you have, and what type of health benefits you offer.

For example, if you're a small business with 10 employees who offers individual health insurance reimbursement, your requirements are different than a large business with 1,000 employees who offers a self-insured group health plan.

The biggest new reform impacting employers with 50+ FTE employees is the Employer Shared Responsibility (ESR). This is the mandate for all larger employers to either offer health insurance, or pay a penalty if/when an employee purchases subsidized coverage from the Marketplace.

Additionally, there are new reporting requirements and health plan design requirements.

The key here is to understand which provisions impact you, and the potential penalties for non-compliance. If you’re unsure which requirements apply to your business, see: Health Care Reform Requirements by Company Size.

Audit Your Current Health Benefits

Now that you understand which ACA requirements are applicable to your company, the next step is to audit your current health benefits to understand if you will pay penalties this year.

If you offer group health insurance coverage, ask:

  • Does the Employer Shared Responsibility (ESR) apply to our business? (Are we an applicable large employer?)

  • If yes, does our health plan meet the requirements of the mandate? Who is offered coverage now? How much are employees paying?

  • Do we anticipate paying ESR penalties in 2015? If yes, how much will they be?

If you offer individual health insurance reimbursement, ask:

  • Does our reimbursement plan comply with the new Market Reforms?

  • If not, what is our plan to switch to a compliant arrangement (ex: an HRP)? And/or what are our anticipated penalties for not complying?

  • Does the ESR apply to our business? If yes, what are our anticipated ESR penalties for 2015?

If you offer nothing, ask:

  • Does the ESR apply to our business? If yes, what are our anticipated penalties for 2015?

  • Do we want to start offering health benefits in 2015?

Tip - Regardless of how you offer health benefits now, it is important to audit them for compliance annually.  For an easy ACA compliance checklist, download this free guide.

Assign a Team Member to Lead ACA Compliance

As you understand and audit your ACA compliance, assign a team member to lead the efforts. This will help your company avoid costly penalties, and ensure that needed changes occur in a timely and accurate way.

Need help in this area? A trusted health insurance broker or consultant can provide assistance in ensuring ACA compliance.

Educate Employees

Employees may feel uncertain and nervous about how the ACA is impacting their health benefits. Many are afraid benefits are being cut or reduced - or that the costs are going up.

Taking the time to talk with employees about any changes will help ease their concerns, and help make your health benefits program a success.

Read more: 5 Ways to Communicate Your Health Reform Strategy to Employees


It is important to take steps now to ensure you avoid costly penalties at tax time next year. To do this, understand your ACA compliance requirements, audit your current health benefits, put someone in charge of compliance, and educate employees.

What questions do you have about staying ACA compliant at tax time? Leave a comment and we’ll help answer it.   

    Affordable Care Act 101 for Small Businesses eBook  

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