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Section 4980D: Are companies with non-compliant plans racking up huge fines?

Brian Anderson

One new post on the Forum asks health insurance experts about Section 4980D. Although the administration pushed back the employer mandate to offer ACA-compliant plans, the administration apparently did NOT delay the $100 per day excise tax per employee regardless of a company’s size for companies with non-compliant plans.

The thread starter asks if all these companies with non-compliant plans are indeed racking up these fines. “The law went into effect on 1/1/2014 and I can’t find anything written that says it has been delayed along with the mandate. In theory a company with 10 employees on 1/1/2014 could already be facing $100 x10 x 160 days or about $160,000 excise tax.”

One responder agreed the penalties have not been delayed, and the fine applies and will be enforced. “What situations/violations they enforce is up for debate, but it should be apparent that this section was not delayed or repealed and therefore still applies. While businesses may not be mandated to provide coverage, they still may be facing these completely different penalties.”

Section 4980D states that “There is hereby imposed a tax on any failure of a group health plan to meet the requirements of chapter 100 (relating to group health plan requirements). The amount of the tax imposed by subsection (a) on any failure shall be $100 for each day in the noncompliance period with respect to each individual to whom such failure relates.”

In a subsequent post, the thread starter says the sad part is it benefits the government to continue to keep quiet and continue to allow these companies to continue racking up excise taxes. “Last but not least what are the penalties the IRS could impose? I have seen clients get hit with a tax and an additional 100% IRS penalty for failure to pay the tax.”

Do you have any insight on this topic? Please join the discussion here.



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