ACA Violations: Penalties and Excise Taxes
The Affordable Care Act (ACA) includes numerous reforms for group health plans and creates compliance obligations for employers and health plan sponsors. The ACA, for example, restricts health plans from imposing pre-existing condition exclusions and requires coverage for preventive care services without cost sharing. Some of the reforms for health plans apply to all health plans, while others apply only to non-grandfathered plans or to insured plans in the small group market.
Overview
- The ACA requires applicable large employers (ALEs) to either provide affordable, minimum value health coverage to full-time employees or face penalties.
- Employers and plan sponsors must also comply with reporting and disclosure requirements under the ACA, such as the health coverage reporting requirements under Code Sections 6055 and 6056.
- In addition, the ACA imposes several taxes and fees, such as the Patient-centered Outcomes Research Institute fees (PCORI fees).
Failing to comply with the ACA’s requirements can trigger substantial penalties for an employer. The potential consequences vary depending on the ACA requirement that is involved and the nature and extent of the violation. Employers should keep these consequences in mind as they review their compliance with the ACA.
This Compliance Overview summarizes the penalties imposed under the Internal Revenue Code (Code) for violations of certain ACA provisions.
- Group Health Plan Reforms
- Summary Of Benefits And Coverage
- Employer Shared Responsibility Rules
- Penalties Related to Reporting Requirements
- PCORI Fees
Links and Resources
- ACA reporting "Cheat Sheet" outlines the deadlines and penalties that apply for 2024 calendar year reporting.
- IRS information return penalties webpage
- IRS Frequently Asked Questions on the ACA’s employer shared responsibility rules, which include penalty information
- IRS Revenue Procedure 2023-34, which includes penalty amounts for ACA returns filed in 2025 (Code Sections 6055 and 6056)
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