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$31B in employer penalties expected, Accenture report says

Feds project $21B in penalties for avoiding ACA law, and another $10B for employers who are unintentionally non-compliant.

Susan Morse, Senior Editor

Photo by <a href="https://www.flickr.com/photos/kathika/2811377129"> Michael Gray </a>Photo by Michael Gray

Affordable Care Act health insurance mandates could penalize employers $31 billion for 2016, nearly 50 percent above original estimates, according to a new report from Accenture.

Under the ACA's employer mandate, those that fail to offer health coverage to their employees are subject to financial penalties.

The Congressional Budget Office has projected that non-compliant employers – those not offering coverage – could face $21 billion in penalties for the 2016 tax-reporting period.

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However, employers deemed "unintentionally non-compliant" could increase that amount by $10 billion, the Accenture analysis found.

This group of employers may not be aware they are not following the law, the report found. They offer health coverage, but fail to meet IRS reporting requirements needed to demonstrate compliance.

In total, employer penalty exposure could reach $31 billion for 2016, compared with an estimated $11 billion for 2015.

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"The challenge is that limited awareness exists on the magnitude of potential penalties," said Scott Brown, managing director of payer consulting for Accenture. "This is further compounded by an increase in coverage requirements despite that many employers are unaware of penalties incurred from last year."

Under the ACA mandate, employers with more than 50 full-time employees must provide health insurance benefits to avoid two potential penalties. For the 2016 benefit year, to avoid incurring the Part A penalty, employers must offer minimum essential coverage to 95 percent of employees and dependents under 26 years-old.

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Employers that meet the minimum essential coverage threshold could still face the Part B penalty if they have failed in the minimum value or affordability requirements included in the law.

"It's critical that employers understand the details and reporting requirements of the law to avoid unexpected penalties," Brown said. "Not only do employers need to offer compliant health coverage, they need to meet the reporting requirements to demonstrate compliance."

Twitter: @SusanJMorse