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ACA Reporting: IRS Holiday Fine Letter

Since the 2015 tax year Applicable Large Employers (over 50 employees) have been required to report to the IRS on the health plan they’re offering their eligible employees. If it was reported the benefits offered weren’t qualified and/or affordable, or that they didn’t offer benefits to an eligible employee, the employer would be fined. Well, as of late last week, those fines could be in the mail!

The IRS has started to mail out Letter 226J, a notice to large group employers that they may be receiving a fine based on their past reporting. As reported by the National Association of Health Underwriters (NAHU) blog post, HERE, these Employer Shared Responsibility Payment (ESRP) amounts are $2,080 and $3,120 for 2015.

These letters should not be ignored. Employers have only 30 days to respond. There will be instruction on how to respond, including if the employer disagrees with the fine.

Remember, these go back to the 2015 plan year; the first year health plans and premium subsidies were available through the Exchange. At that time, it was up to the individual employee to state whether the coverage offered through their employer was qualified and affordable. Even if your plan was both, but the employee claimed it was not, a subsidy would have been offered and potentially accepted. That acceptance would lead to this letter reporting a fine of potentially thousands of dollars.

So, as we enter the holiday season, Applicable Large Employers (ALE) need to be on the lookout for an IRS’ holiday letter! If you have any questions, or need assistance in your response to the letter, please reach out to a KBM Management Account Executive.

Happy Holidays!

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