What is the sledgehammer penalty?

The “A” penalty, also known as the “sledgehammer penalty’ is triggered when an ALE fails to offer MEC to at least 95% of its full-time workforce and their dependents and had at least one full-time employee receive a Premium Tax Credit (PTC) from a state or federal health exchange.

What is the difference between 4980H A and 4980H B?

Difference Between The IRC Section 4980H(a) Penalty And IRC Section 4980H(b) Penalty. The IRC Section 4980H(b) penalty may apply if an ALE fails to provide coverage to all full-time employees. It also applies if ALE’s coverage is not affordable or doesn’t offer minimum value.

What is the 4980H a penalty?

For the 2022 tax year, the 4980H(a) penalty amount is $229.17 a month or $2,750 annualized, per employee. The IRS issues the 4980H(a) penalty when: An employer doesn’t offer Minimum Essential Coverage (MEC) to at least 95% of its full-time employees (and their dependents) for any month during the tax year, and.

What are the ACA codes?

The IRS has created two sets of ACA codes to provide employers with a consistent way to describe their medical benefit offerings to their employees. Each code indicates a different scenario regarding an offer of coverage, or explains why an employer should not be subject to a penalty for an employee, for each month.

What is ACA affordability for 2021?

IRS lowers the ACA affordability percentage for 2022 On August 30, 2021, the Internal Revenue Service (IRS) issued Revenue Procedure 2021-36, decreasing the affordability percentage index from 9.83% in 2021 to 9.61% for plan years beginning in calendar year 2022.

What is ACA penalty?

A penalty of $2,750 (for 2022) per full-time employee minus the first 30 will be incurred if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents, and any full-time employee obtains coverage on the exchange.

What is an ACA safe harbor code?

The Federal Poverty Line (FPL) Safe Harbor is a method for proving ACA affordability that is based on an employee’s annual household income, which is a function of that employee’s household size and is adjusted on an annual basis. Each year, the Department of Health and Human Services (HHS) publishes the annual FPL.