Total employer penalties related to the health insurance mandates from the Patient Protection and Affordable Care Act are expected to reach $31 billion for 2016, nearly 50% more than original estimates, according to research released by Accenture (NYSE: ACN).

Under the ACA’s “employer mandate,” employers that fail to offer health coverage to their employees are subject to financial penalties. The Congressional Budget Office has projected that non-compliant employers — those not offering coverage — could face $21 billion in penalties for the 2016 tax-reporting period. 

However, Accenture identified a new segment of employers, deemed “unintentionally noncompliant,” whose penalty exposure could amount to an additional $10 billion during the 2016 tax period. This group represents employers that offer compliant health coverage yet fail to meet IRS reporting requirements needed to demonstrate compliance under the law. In total, employer penalty exposure could reach $31 billion for 2016, compared with an estimated $11 billion for 2015.
 
“The challenge is that limited awareness exists on the magnitude of potential penalties,” said Scott Brown, managing director of payer consulting at Accenture. “This is further compounded by an increase in coverage requirements despite that many employers are unaware of penalties incurred from last year.”
 
Under the ACA’s mandate, employers with more than 50 full-time employees must provide health insurance benefits to avoid two potential penalties. For the 2016 benefit year, to avoid incurring the “part A” penalty, employers must offer minimum essential coverage to 95% of employees and dependents under 26 years old. Employers that meet the threshold could still face the “part B” penalty if they fail to meet either the minimum value or affordability requirements included in the law.
 
“It’s critical that employers understand the details and reporting requirements of the law to avoid unexpected penalties,” Brown said. “Not only do employers need to offer compliant health coverage, they need to meet the reporting requirements to demonstrate compliance.”

Accenture analyzed employer data from Tango Health to assess the penalty exposure under the ACA resulting from shifts in the minimum essential coverage threshold. Penalty exposure was then compared to US census data on total establishments and employer sizes.