IRS Updates Employer Shared Responsibility Questions and Answers

Employer Shared Responsibility Q&As On August 19, 2020, the IRS updated its guidance on the employer mandate (also known as employer shared responsibility).

The Q&A updates reflect index adjustments to penalties and the affordability percentage for calendar year 2021. The employer shared responsibility payment, which is the penalty an applicable large employer must pay if it does not offer minimum essential coverage to at least 95% of its full-time employees, is now the product of $2,700 (which is up from $2,570 in 2020) multiplied by the number of full-time employees employed for the calendar year. The penalty for failing to offer affordable coverage or coverage that does not provide minimum value, which is computed separately for each month, is the product of $4,060 (up from $3,860 in 2020) multiplied by the number of full-time employees who received premium tax credits in that month. The update also confirms that the percentage used to determine whether coverage is affordable (the affordability threshold) for plan years beginning in 2021 is now 9.83% (up from 9.78% for plan years beginning in 2020).

As a reminder, the draft 2020 versions of the ACA employer shared responsibility reporting forms were discussed in the July 21, 2020, edition of Compliance Corner.

Employers should be aware of these updates when determining premiums for 2021 and preparing their employer shared responsibility reporting forms for the calendar year 2021.

Source: NFP BenefitsParters

Filed under: Abentras Blog

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