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Still the Law of the Land: ACA Penalties Remain In Effect

On January 20, 2017, President Trump signed an executive order intended to “minimize the unwarranted economic and regulatory burdens” of the ACA until the law can be repealed, and eventually replaced.

This action led many business owners to wonder whether the penalties imposed by the ACA are still in effect given the language of the executive order. The short answer is “yes.”

While the January order broadly directs the Department of Health and Human Services, and other federal agencies, to waive, delay or grant exemptions from ACA requirements that may impose financial burdens on businesses, it does not include specific guidance for any particular ACA requirement, nor does it change any existing regulations.

Now, the Internal Review Service (IRS) Office of Chief Counsel has issued several letters regarding both the individual and employer penalties of the ACA in order to clarify this uncertainty. These communications have confirmed that:

  • Employer shared responsibility penalties continue to apply for applicable large employers (ALEs) that fail to offer acceptable health coverage to their full-time employees (and their dependents)
  • Individual mandate penalties continue to apply for individuals who do not obtain acceptable health coverage (unless they qualify for an exemption)

Both businesses and individuals must continue to abide by the provisions of the ACA to avoid these penalties, and any current penalties will remain due.