Test Your ACA Knowledge – Question 6

What triggers a potential Section 4980H penalty for ALEs not in compliance with the ACA’s employer mandate?

An employee:

A. Notifies the IRS
B. Notifies the DOL
C. Enrolls for coverage on an Exchange
D. Enrolls for coverage on an Exchange using a valid Premium Tax Credit (PTC)
E. Enrolls in IFP coverage

D) Enrolls for coverage on an Exchange using a PTC.

An employer that does not follow the ACA’s employer mandate may be subject to one of two penalties under IRS Section 4980H. Both penalties are triggered when an ALE’s employee receives a valid PTC for coverage through the Exchange. An employer will never be assessed both penalties. If both apply, the employer will always be subject to the lesser of the two penalties.

Penalties associated with 4980H have increased for the 2017 tax year. Click here to see the updated penalties.

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