YOU DIDN’T OFFER HEALTH INSURANCE? HERE IS YOUR $100,000 PENALTY
The IRS has not forgotten about Obamacare (ACA).
The IRS is sending letters to restaurants and proposing penalties in the tens of thousands of dollars unless you can prove that you complied with the rules.
There are 2 types of notices.
1) One is called a 5699 Letter stating that according to the number of W-2’s filed for your establishment, you may be liable to file information returns and provide health insurance to your full-time employees. Currently the IRS is auditing 2017 and 2018.
If you get such a letter you must respond within 30 days or face penalties.
If you respond that, based on the proper calculations, you are under 50 employees or if you have some other reason for non-filing you should be okay.
If you respond that you had more than 50 employees or you do not respond at all you could be in a world of hurt. Penalties can be up to $540 for each non-filed form. In addition, you may still be liable for not offering health insurance which is a whole separate penalty.
2) The second letter you may receive is Letter 226-J. This letter proposes a penalty if you filed properly but 1 or more of your full-time employees received health insurance coverage through the government-sponsored Exchange. Some of these penalties can exceed $100,000.
To defeat this penalty, you must show that you offered minimum coverage to your full-time employees and their dependents. This needs to be done each year in January. Kallas can give you a list of your full-time people and provide you with the proper waiver form for your employee to waive out of your coverage.
So for 2021, to be in compliance:
- Have Kallas determine if you are over 50 employees. (Commonly owned restaurants must be all included as one.)
- Obtain a legitimate health insurance offer you can present to full-time employees and the terms for an employee to join. If the IRS finds that your insurance plan is either non-affordable or of minimum value, the penalty is $3,750 per full-time employee.
- Obtain a signed waiver from any full-time employees who do not want to join. Waivers can be obtained from Kallas.
- Important: Keep a copy of the waivers for a possible audit later.
- Kallas will request information from you to file the proper paperwork. This is due in January of each year.
- Pass out 1095-C forms to full-time employees along with their W-2’s.
REMINDER UPDATE ON WHAT YOU NEED TO DO
By November 15, 2020
You will receive a Service Agreement regarding ACA. A 2020 fee chart will be included. You must sign and return the form for Kallas to perform the calculations necessary for 2020 to determine if you have 50 or more full time employees. You must also sign the agreement if you would like to consult with Kallas regarding the best way to meet your obligations at the lowest cost.
By December 15, 2020
Kallas will notify you of your filing obligations for 2020 and 2021. Kallas will need company group health insurance information along with a list of full-time employees who have signed waivers.
By January 1, 2021
If you are over the 50 full time threshold, you should start compliance for 2021 by obtaining a legitimate health insurance offering to your full time employees and their dependents and obtaining waivers for those who opt out.
By January 31, 2021
Form 1095 C will be prepared and mailed to you for distribution to full time employees along with W-2’s
By February 28, 2021
Form 1094 C and copies of forms 1095 C are due to the IRS. Kallas performs this function for you. Nothing you have to do.
By March 24, 2021
Kallas billings for the above services will go out.
The employer’s requirements for Obamacare is still a significant administrative cost to businesses. Many firms are charging thousands of dollars to administrate Obamacare compliance. Kallas has systems in place to advise you and, based on what we have seen in the marketplace, we are still the lowest priced company producing the required paperwork.
If you have any questions regarding your requirements under Obamacare, call Jordan at Kallas.