Insights: Article

Affordable Care Act Compliance and “Pay or Play” Penalty Letter Example

By Tonya Rule

September 24, 2018

Since the Affordable Care Act (ACA) became reality, businesses have been scrambling to figure out what compliance looks like and how best to comply. Then when they find themselves in trouble, they worry about how to respond to the IRS. We can help reduce that worry, as we did recently for a client facing an ACA compliance penalty notice.

Million Dollar Penalty
The client had received an IRS Letter 226J that assessed a $1.1 million penalty. After reviewing the client information, we responded to the IRS and provided back-up documentation for the year 2015 including:

  • Insurance plan offerings
  • Insurance waivers
  • Termination documentation
  • Affordability calculations
  • Employee hours worked
  • Applicable transition relief applicability

Based on the information provided, and our involvement in the presentation of those materials, the IRS abated the entire penalty for the year 2015.

Incorrect Filings
As a result of the abatement for the year 2015 forms, we were hired to review subsequent year’s filings that had been completed by the client.  We determined that every 1095-C form that they filed for 2016 was filed incorrectly. 

Rather than just redoing the 2016 ACA filings, we worked with the client to help them understand the IRS rules and then amended their 2016 and 2017 forms with the IRS, so that the client could avoid receiving penalty Letter 226J for 2016, 2017 and future years.

We Are Your ACA Resource
When you work with us to comply with 1094/1095 filing requirements, we can do everything from A to Z to ensure compliance, or just those parts that you are uncomfortable handling. The choice is yours, but compliance is a must. Contact your Eide Bailly professional or a member of our Health Care Reform team to learn more.

Latest Insights

November 5, 2018
There are many forms individuals and businesses need to consider as they work to comply with the ACA. Receiving and completing the appropriate form at the right time is key.
October 8, 2018
This insight outlines some key considerations as you work to avoid costly ACA penalties.
October 1, 2018
Complying with the ACA is important. Employers face steep penalties for non-compliance. The following outlines penalties as noted on
September 19, 2018
The IRS has started sending out Letter 5699 asking businesses to verify if they should have filed Forms 1094/1095-C. These forms are required for all ALEs.
September 17, 2018
When an IRS Letter 226J is received, it is important to respond timely and with accurate information to eliminate, abate or reduce IRS calculated penalties
December 29, 2017
The IRS announced that they will be extending the 2018 due date for employers and providers to distribute 2017 individual health coverage forms. The original due date for insurers, applicable employers and other such coverage providers to issue…
Find A Location