IRS Clarifies ACA Penalties & Releases Draft of Forms 1094 & 1095

After the failure to repeal and replace the Affordable Care Act (ACA), the Internal Revenue Service (IRS) has recently confirmed which ACA penalties are still effective.

• The Employer shared responsibility penalties (95% rule) continues to apply to applicable large employers that file to offer acceptable health coverage to their full-time employees (and dependents).
• Individual mandate penalties continue to apply for individuals that do not obtain acceptable health coverage (if they do not quality for an exemption).

This confirmation comes after confusion over President Trump’s executive order directing federal agencies to provide relief from the burdens of the ACA. An executive order does not change the current law. The law cannot be changed unless it’s passed through Congress. So schools, cities, and counties must continue to follow all ACA rules, reporting requirements, and pay penalties (if applicable).

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In addition, the IRS also released draft versions of ACA reporting Forms 1094 and 1095 for the 2017 tax year. Forms 1094-B and 1095-B are used to report health plan enrollment. Forms 1094-C and 1095-C are used by ALEs to report about employer shared responsibility. Minor changes were made. Final versions of the forms will be released in the next few weeks.