Be Ready for ACA Penalty Letters

Employers should start gearing up for IRS penalty letters issued under the Affordable Care Act. According to an announcement posted on the IRS website, the IRS has “has postponed mailing and responding to Employer Shared Responsibility Payment (ESRP] related correspondence until after July 15, 2020.” This decision to postpone ESRP correspondence was made based on the COVlD-19 considerations. Here are some frequently asked questions to assist you in addressing upcoming IRS penalty letters under the ACA.

Who does this announcement apply to?

Under the ACA’s Employer Mandate, certain employers [called Applicable Large Employers or ALEs) must either offer Minimum Essential Coverage to their full-time employees (and their dependents] and that is “affordable” and provides “minimum value” to the employee, or make an ESRP to the IRS.  An ALE is an employer with 50 or more full-time, or full-time equivalent, employees.

Will the IRS be issuing penalties under the Employer Mandate given the COVID-19 pandemic?

Absolutely. Now is a critical time to get in compliance with the ACA, the most important health care legislation in generations. To illustrate this point, the IRS Office of the Chief Counsel recently issued new field advice making it clear that there is no statute of limitations for the assessment of an ESRP under Internal Revenue Code Section §4980H. This means that current and past non-compliance with the ACA can create liabilities.

My organization is an ALE – how can we avoid an ESRP?

If your organization is unsure of where it stands with respect to ACA reporting compliance, Brinson Benefits, Inc. can perform a free ACA Penalty Risk Assessment to diagnose risk areas in your compliance strategy and get you on track.

I received a penalty letter from the IRS. What should I do?

If you have received a Letter 226J from the IRS, contact us immediately to discuss how best to respond. A response is expected within 30 days of the date of the letter. 

To learn more about ACA reporting compliance in 2020, or if you received a 226J letter, contact us at compliance@brinsonbenefits.com