The Affordable Care Act (ACA) employer mandate applies to employers who fall into the Applicable Large Employer (ALE) classification outlined in the law. An applicable large employer is any company or organization that has an average of at least 50 full-time employees or full-time equivalents. For the purposes of the Affordable Care Act, a full-time employee is someone who works at least 30 hours a week.
If an employer is classified as an Applicable Large Employer, they must either offer a group health plan to their full-time employees that is of a “minimum value” and is “affordable” or potentially pay a fine known as a ‘’shared responsibility payment’’. In 2016, the federal government Health Insurance Marketplace for individual health insurance sent out notices to certain employers that had an employee attest to the government marketplace (Healthcare.gov) that they were neither enrolled in employer sponsored coverage or eligible for employer coverage that is affordable and meets the minimum value standard. At that time employers who received an individual notice had 90 days to respond and provide an appeal. No fines were imposed since this first step involved data collection.
More recently, the IRS began sending Employer Shared Responsibility Payment Notices known as the 226J letter, to specific employers outlining the payment they owe for their full-time employee or employees that received an individual premium tax credit for the purchase of a private individual health plan on the Marketplace. If you receive such a notice and do not agree with the IRS findings you must act immediately as outlined by the IRS in their publication entitled “Your Appeal Rights and How To Prepare a Protest If You Don’t Agree”.
Generally, only Applicable Large Employers (ALEs) who had full-time employees enrolled into a private individual health plan through the Marketplace that qualified for a premium tax credit should receive a notice for payment. If you do receive a 226J letter from the IRS, our agency can assist you with an initial review. However, if a formal appeal must be filed we will recommend you work with your legal counsel or with a law firm we can recommend.
Hopefully, your firm will not receive this Holiday Greeting from the IRS. However, if you do, take immediate action since the timeline to respond to your defense is limited.