Employer Mandate Penalty Letters from the IRS Are on the Way
In the next few months, the IRS will begin sending letters notifying employers that they may owe a penalty for failing to offer health coverage under the Affordable Care Act's Employer Mandate for the 2015 calendar year. The Employer Mandate is enforced through a tax penalty referred to as an "Employer Shared Responsibility Payment" ("ESRP"). Effective January 1, 2015, the ESRP may apply to employers that do not offer minimum essential health coverage to all employees who work, on average, 30 or more hours per week. Employers will have only 30 days to respond, making it important to be on the lookout for any letters from the IRS. Employers should keep in mind that:
- The notice mailing will include a few documents:
- Letter 226J, providing the amount of the proposed ESRP, how the amount was calculated, and an explanation of how to respond. A sample is available here.
- Form 14765, listing each employee: (i) who received a premium tax credit during the applicable year; and (ii) for whom the employer filed a Form 1095-C but did not qualify for an affordability safe harbor or other ESRP relief.
- Form 14764, to use in responding to the IRS and indicating whether the employer agrees or disagrees with the proposed ESRP penalty.
For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com/contactus/.
Catherine E. Livingston
Washington / Boston
+1.202.879.3756 / +1.617.449.6877
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