IRS Announces ACA Penalty Notices – With 30-Day Response Time

IRS Announces ACA Penalty Notices – With 30-Day Response Time

November 27, 2017

The IRS has announced that it is notifying Applicable Large Employers (with 50 or more full-time or full-time equivalent employees) “in late 2017†of shared responsibility penalties under the Affordable Care Act (ACA). The penalties will be for calendar year 2015 – the first year that employer reporting was required. The notices are being sent as letters from the IRS, and employers who disagree can respond to appeal the penalties.

The time for responses is short – generally only 30 days – and no mention has been made of extensions, although some relief is available for 2015 for employers meeting certain requirements. Employers who receive penalty notices should be prepared to carefully review the notices, compare them against filings they made for 2015, and respond within the 30-day time limit.
The non-deductible penalties are indexed for inflation and can be significant. The two penalties, which are imposed monthly, are as follow:

  • Failure to provide minimum essential coverage to at least 70% of full-time employees in 2015, and one full-time employee purchases health coverage with a premium tax credit through the Exchange.
    • $2,080/year/per employee (or $173.33/month/per employee) calculated on the total number of employees less the first 80 employees (for 2015 only)
  • Failure to provide either minimum value or affordable coverage for full-time employees in 2015.
    • $3,120/year/per employee (or $260/month/per employee) calculated for each full-time employee who received a subsidy under the ACA.

To help employers who could receive this IRS notice prepare, HR Web Advisor is offering a 90-minute webinar at 1 p.m. Eastern Time on Tuesday, Dec. 5. It is appropriate for human resources and employee benefits staffs, as well as financial officers, in-house counsel and CEOs. Registration information is available here.

To learn how REDW can help your organization with this new development or other issues relating to the ACA, please contact Alicia Finley.

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