If you are an Applicable Large Employer (ALE), or a company that employs 50 or more full-time or full-time equivalent employees, then you are required to offer 95 percent of the workforce and dependents Minimum Essential Coverage (MEC) that meets Minimum Value (MV). This is known as the ACA Employer Mandate. When the ACA Employer Mandate is not met with total compliance by an organization, companies may be sent penalty notices, even years after filing or furnishing noncompliant forms or failing to include accurate information. With this in mind, you’ll want to be very careful when filing ACA forms. We’ve listed below some of the most common causes of ACA penalties. Failure to accurately include the following: Aggregated Employer Group Analysis: When related entities are not grouped within the same organization according to the ACA, this can lead to hefty penalties. Appropriate IRS Approved Measurement Methodology: Organizations must use one of the two correct measurement methodologies approved by the IRS. Without these methodologies, the chance for penalties is much higher. Other causes for penalties Employee Misclassification: Some companies or organizations may not be an ALE on their own. However, some organizations, when grouped together as a conglomerate, can be considered an ALE. Within the ACA, part-time, full-time, and seasonal employees have different classifications and must be categorized accurately. Documenting health benefits incorrectly: Specifics regarding the health plan your company provides to employees must be carefully and accurately documented. Any special plan arrangements, including HRAs, flex credits, and opt-out payments must be reported as well. Incorrectly tracking employment periods: To determine ACA full-time status, you must carefully track your employee rehire, hire, and dates of termination. Providing incorrect information can lead to ACA penalties. Types of penalty notices issued to employers: …
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