The Internal Revenue Service (IRS) is now enforcing the “employer shared responsibility” clause of the Affordable Care Act (ACA). The provision requires employers with 50 or more employees to offer health insurance to eligible employees. If an employer does not offer this coverage, the employer is subject to the “employer shared responsibility payment”, which can be a large penalty depending on the IRS’s findings. The notice, known as “Letter 226J” should be addressed as soon as it is received.
Whether or not you have offered the required level of coverage to a sufficient percentage of your employees (and their dependents) determines which of the two penalties would apply – the “(a)” penalty, which for 2015 was $173.33 per month multiplied by the number of full-time employees in excess of 80, and which applies if you fail to offer “minimum essential coverage” to at least a prescribed percentage (70 percent for 2015; 95 percent currently) of your eligible full-time employees and their dependents and at least one full-time employee was allowed the PTC, or the “(b)” penalty, which for 2015 was $260 per month for each full-time employee who received the PTC for that month, and which applies if you do offer the required minimum essential coverage to the requisite number of employees, but at least one full-time employee receives the PTC because either he or she was not offered coverage, or the coverage otherwise was not ACA-compliant.
For more information, please click here.