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Affordable Care Act Update: Employer Shared Responsibility Payment Letter Issued

By   Tonya Rule

November 21, 2017

The IRS has issued a sample Letter 226J that will start going to Applicable Large Employers (ALEs) that had a full-time employee receive a Premium Tax Credit (PTC) and that employee was not offered affordable and adequate health insurance. 

Employers will receive the letter based on how their 1095-Cs were filed, meaning, if there wasn’t an applicable safe harbor code on line 16 and a full-time employee received a PTC, the IRS will issue Letter 226J to the employer. Therefore, it is extremely important for employers to never leave line 16 on the 1095-C blank, unless a blank is applicable. Page three of the sample 226J letter notes:

About the Form 14765, Employee PTC Listing

The Employee PTC Listing shows the name and truncated social security number of each full-time employee for whom you filed a Form 1095-C if:

  • The employee was allowed a PTC on his or her individual income tax return for one or more months of the tax year shown on the first page of this letter; and
  • You {the employer} did not report an affordability safe harbor or other relief from the Employer Shared Responsibility Provisions (ESRP) on the employee’s Form 1095-C for one or more of the months the employee was allowed a PTC.

Updated FAQ

The IRS recently revised their FAQs on the ESRP under the ACA. Click here to learn more about how the IRS will be enforcing the “pay or play” employer penalties. It’s important to note that employers will have 30 days from the date of the letter to respond back to the IRS. It is probable that by the time the letter gets to the employer, the employer will only have three weeks left to respond. Since the IRS has now taken steps to start issuing the employer mandate, employers need to be prepared to respond to these notices quickly. Assistance in responding to these notices is advisable.

Be Prepared

Click here to review a checklist of things to consider to avoid costly Affordable Care Act penalties. Our recent ACA Common Compliance Mistakes video is an additional resource.  

Contact your Eide Bailly professional or our health care reform team, with questions or for assistance in completing or reviewing your ACA compliance requirements.