JGS Insurance Compliance Alert - ACA Employer Mandate Penalty Assessments Have Arrived

16 October 2017 By Barry E. Fields

The Internal Revenue Service (IRS) recently began notifying employers via a letter containing several attachments if the company may owe a penalty for failing to comply with the employer mandate requirements for the 2015 calendar year under the Affordable Care Act (ACA).  If you receive a letter, don’t panic! This is just the first step in assessing an employer mandate penalty. The determination of whether an employer may be liable for a penalty and the amount of the potential payment are based on information reported to the IRS on Forms 1094-C and 1095-C for 2015 (filed in early 2016) and the IRS’s records of who received a premium tax credit.  If the IRS determines that, for at least one month in the year, one or more of the employer’s full-time employees received a premium tax credit and the employer did not satisfy the offer of coverage rules, this letter (Letter 226J) will be issued. It will include:

  *   a brief explanation of the employer mandate provisions;
  *   a summary table itemizing the proposed payment by month and indicating whether liability applies for each month and, if so, whether it’s for the A penalty or the B penalty;
  *   an explanation of the summary table;
  *   a response form, Form 14764, “ESRP Response”;
  *   an employee premium tax credit list, Form 14765, “Employee Premium Tax Credit (PTC) List” which lists, by month, the employees who received a PTC that triggered the letter;
  *   the actions the employer should take if it agrees or disagrees with the proposed penalty; and
  *   the actions the IRS will take if the employer does not respond in a timely manner.

Our greatest concern about the Employer Mandate was an employee who waives your coverage and receives a subsidized individual policy from the Marketplace Exchange when they were not entitled to one. Since we believe this has been a frequent mistake, do not panic. It will take some effort to avoid the penalty, but in the end you are safe if the medical program offered by the company met the “Minimum Value” and the “Affordability” requirement for all full-time employees.

Please let us know if you have any questions and/or need assistance with responding to the IRS.

Barry E. Fields
Vice President, Employee Benefits

Cell: 908-406-7000 | Fax: 732-834-0233
101 Crawfords Corner Road, Suite 1300, Holmdel, NJ 07733


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Last modified on Tuesday, 05 December 2017 15:40

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