How to use ACAwise's ACA Penalty Calculator to determine potential ACA penalties?
696 views | Last modified 1/28/2021 7:42:19 AM EST | Added by ACAwise Team

Under the Affordable Care Act (ACA) Employer Mandate,  ALEs (an employer with 50 or 50+ more full-time equivalent employees during the previous year) are liable for the Employer Shared Responsibility Payment (ESRP) under sections 4980H (a) and (b), if they fail to offer Minimum Essential Coverage and the offered coverage is not affordable and does not provide minimum value to 95% of their full-time equivalent employees.

If you want to know what your potential ACA penalties could be from the IRS, use our ACA penalty calculator. This tool helps you determine your ACA penalty in a few steps.

Follow these steps to use ACAwise's ACA Penalty Calculator to estimate your ACA penalties:

Information to use 

• Reporting year

Choose the tax year for which you want to estimate penalties. 

• Applicable Large Employer (ALE) Status

To comply with the ACA employer mandate, you must be an ALE. To determine whether you are an Applicable Large Employer, use our ALE status calculator. This tool helps you confirm your ALE status instantly.

• The health insurance coverage information

To calculate ACA penalties, you must understand your health insurance coverage information. 

For example, You should be aware of whether or not you have offered Minimum Essential Coverage that is affordable and provides Minimum Value to all your full-time equivalent employees and their dependents.

Determining ACA penalties

Once you have the necessary information, here’s what to do next:

Step 1: Select the Tax year you want to calculate the penalty for

Step 2: Select whether you are an Applicable Large Employer or not.

2. (a). If you selected No, then you are not an ALE, and you will not fall under the Employer Shared Responsibility Payment from the IRS.

2. (b). If you selected Yes, enter how many full-time equivalent employees you have. (Please note: if you are an ALE, then you must enter 50 or >50 in the provided box)

Step 3: Select whether you have offered Minimum Essential Coverage to all your full-time equivalent employees.

3. (a). If you selected Yes, it will navigate you to the next question. See step 4.

3. (b). If you selected No, enter the number of full-time equivalent employees you have not offered health insurance coverage to.

For example, if you have not offered MEC to 20 employees, enter the number in the box provided and click on the Show Result. The result shows you the ESRP for the failure to offer MEC for the selected tax year. 

Step 4: Select whether or not you have offered affordable health coverage to your full-time equivalent employees.

4. (a). If you selected Yes, click on Show Result, the result shows that you are not liable for ESRP for the selected tax year.  

This is because you have offered MEC that is affordable to all full-time equivalent employees. 

4. (b). If you Selected No, enter how many full-time equivalent employees you have not offered affordable health coverage.

For example: If you have not offered affordable coverage for 10 full-time equivalent employees, enter in the box provided and click on Show Result. 

The result shows the ESRP for the failure to offer affordable MEC for the selected tax year. 

Get Your ACA penalty Report

If you’d like access to this ACA penalty report for future reference, enter your information and we will email it to you. Submit the valid information in the provided box, this allows us to send your results via email instantly. 

If you are an ALE who has failed to meet the ACA employer mandate requirements, you can use our ACA penalty calculator to find out what your potential ACA penalty amount could be from the IRS in a minute.