Penalties / Sledge Hammer or Tack Hammer

Employers will be subject to different penalties determined by the specific coverage offered. The following information was obtained from IRS.gov

Sledge Hammer Tax

In 2017, if the Applicable Large Employer (ALE) fails to offer Minimum Essential Coverage and at least 1 employee receives a premium tax credit (subsidy) from the Health Care Exchange (Healthcare.gov), then the penalty is $2,260.00 for every full-time employee (less the first 30). Employers must treat all employees who average 30 hours per week as a full-time employee.

Tack Hammer Tax

In 2017, if the Large Employer fails to offer Minimum Value or Affordable coverage and the employee receives a premium tax credit (subsidy) from the Health Care Exchange, then the penalty is $3,390, but only for the one employee who obtained the subsidy.

If an employee receives subsidized coverage, the employer will be notified by the Health Insurance Marketplace. The employer will then be provided an opportunity to respond and appeal if the employee was offered coverage that meet the minimum value and affordability standards.

IRS CODE 6056

Reporting Requirements

IRS CODE 6056 is intended to determine whether a Large Employer is subject to an employer penalty and/or whether an individual is eligible for a premium tax credit.

This determination is made, each year, based upon form 1095-C which must be issued by all applicable large employers to all employees along with annual W-2’s. This reporting will include information on all employees who were offered and accepted coverage, and the cost of that coverage on a month-by-month basis. These forms, like W-2’s, are also sent to the IRS. The employer will not be contacted by the IRS about penalties for any given year until after individual tax returns and employer information reports on coverage are received.