The IRS will begin enforcing the employer shared responsibility provisions of the Affordable Care Act later this year. The employer shared responsibility provisions require applicable large employers to offer affordable health coverage providing minimum value to their full-time employees or make a payment to the IRS if one of their full-time employees receives a tax credit for purchasing individual coverage through the health insurance Marketplace.
The IRS has long maintained a series of Frequently Asked Questions on the employer shared responsibility provisions. See our prior article by clicking here. Last week, the IRS updated these FAQs, confirming that enforcement of the shared responsibility provisions is imminent. In a new set of Questions and Answers, the IRS explains how it will assess and collect payments from employers that don’t satisfy the employer shared responsibility requirements.
The new Questions and Answers, starting with #55, can be accessed by clicking here.
The guidance provides:
- The IRS will issue Letter 226J to an applicable large employer if it determines that for any month, one or more of the employer’s full-time employees received a tax credit and was enrolled in a plan through the Marketplace. Letter 226J will include a payment summary table itemizing the proposed payment by month and will provide a descriptions of actions to take if the employer disagrees with the assessment. A sample of the IRS Template for Letter 226J can be accessed by clicking here.
- An employer will have an opportunity to respond to Letter 226J before the penalty is assessed and a demand for payment is made. The IRS will answer the employer’s response with Letter 227 and give the employer a timeframe for another response.
- If an employer must make an employer shared responsibility payment, the IRS will send a notice and demand for payment. Collection actions may be initiated if the employer does not respond timely.
- The IRS intends to begin issuing Letters in late 2017.
Applicable large employers should be making sure they offer affordable coverage to all full-time employees. They should also keep on the lookout for communications from the IRS about the employer shared responsibility provisions.