The Internal Revenue Service (IRS) has indicated that it plans to begin notifying employers by year end of their potential liability for failing to provide sufficient health coverage that is compliant with the Patient Protection and Affordable Care Act (ACA). The agency will begin notifying Applicable Large Employers (ALEs) of their potential liability for the Employer Shared Responsibility Payment (ESRP) if any, for the 2015 calendar year. An ALE would be subject to a penalty, if, for at least one month in the year, one or more of its full-time workers received a premium tax credit through the ACA’s Health Insurance Marketplace, because the ALE did not provide compliant health coverage.
The affected employers should expect to receive a Letter 226-J, a Preliminary Calculation of the Employer Shared Responsibility Payment. This Letter 226-J will be used to notify employers that they may be liable for an ESRP. The determination of whether an ALE may be liable for an ESRP and the amount of the proposed ESRP in Letter 226-J will be based on information from Forms 1094-C and 1095-C filed by the ALE and individual income tax returns filed by the ALE’s employees.
It is important to note that employers will have just 30 days to respond before a demand for payment is made by the IRS. As you may recall, 2015 was a transitional year that defined an ALE as having 100 or more full-time employees, rather than the current 50 or more threshold. For 2015, ALEs were required to “offer minimum essential coverage which also met the minimum value to at least 70% of full-time employees and their eligible dependents”, rather than the current 95% statutory threshold. The penalty for 2015 violations can be quite costly. An ALE could face a $2,000 penalty for every full-time employee, if there was no valid offer of coverage and a $3,000 penalty if the offer was not affordable.
Moving forward, employers should ensure that an administrative process is in place not only to make the necessary payments, but to respond and gather information for the response to the agency. The IRS has not indicated whether an extension to respond will be granted, therefore, a timely, accurate response is necessary, as after 30 days, the IRS will demand payment.
At Innovative, we are committed to keeping you informed about ongoing compliance requirements. Please contact us if you have any questions about the IRS penalty and ACA requirements.
Feedback From Our Happy Customers
I wanted to take a moment and tell you how absolutely thrilled I am to have Innovative Benefit Planning as my broker. We moved over roughly a month ago and I have never received service like I have since making the transition. With so many employers being challenged with COVID19 and us making the move right in the middle, it could not have been more seamless. Everything was set up to exceed all expectations and it continues. Innovative Benefit Planning has taken the worry and stress away. It was truly the best decision for Title Alliance and I look forward to a long and productive partnership.
The Innovative team is well respected at AFS. My staff and I feel they are an extension of our HR team! Since implementation, they have always remained committed to assisting AFS with all of its healthcare needs; in fact, it doesn’t matter what time of day, they always respond in a timely manner.
Each year they come up with fresh material so our employee’s interest is always peaked. A few years ago, Innovative provided us with documentation to show that moving from a fully insured program to self-insured would be more cost effective for AFS, and it has been! Innovative has truly made our jobs easier so we can focus on other tasks.
As an HR professional, Innovative makes my job easier and benefits administration much less overwhelming than it would otherwise be.
They are truly a partner with me to make sure our team members have the best benefits and service around their benefits that we can offer. Innovative’s team is responsive, professional and resourceful. (They are at the forefront of knowledge in many areas, including ACA reporting and compliance, which can get highly complicated.)
As a client for the last 4 years, we love working with our Innovative Benefit Planning team because of their service model, scope , depth and quality of expertise in handling our benefits and renewals.
Their level of commitment just keeps getting better each year. They have more than met our expectations on renewal negotiations, response time, assistance with ongoing plans, open enrollment material, meetings, support, bill auditing, and wellness programs.
Since our partnership with Innovative Benefit Planning in 2017, it has been a seamless one. Innovative always provide options, suggestions and recommendations when it comes to our benefits renewal.
Innovative is always present even when open enrollment ends, their year round communication reminds me that I can always reach out for help at any time. Their professionalism is the utmost one can expect. My account representative Jenni is wonderful, courteous, knowledgeable and very helpful.
We have been dealing with Innovative Benefit Planning for many, many years. They have given us nothing but exceptional service.
We can pick up the phone or email them and they always resolve our questions and take care of our employees insurance issues in a very timely manner. They negotiate our insurance rates every year and have managed to reduce the increase every year. Every account manager we’ve had throughout the years have been great to work with.
I have been working with Innovative Benefit Planning for over six years. Previous to Innovative, I had used the same broker for about 25 years. I was used to doing everything myself during open enrollment with my previous broker.
When Innovative came on board, I was pleasantly surprised how “on top” of things they were. I never have to call them and bother them about getting rates to me for open enrollment, as they are in touch with our carriers on a regular basis, and they get me my information for open enrollment as soon as they receive it from the carriers.