ACA and Play or Pay—IRS Letters 226J Are On the Way

The IRS started sending 226J notices of potential “play or pay” Affordable Care Act (ACA) penalties to employers. What should you do if you get one? Well . . .

ACA and Play or Pay—IRS Letters 226J Are On Their Way

Remember 2015?
. . . Viola Davis won the Emmy for Best Actress.
. . . Han Solo, Luke, Princess Leia and Chewie returned to the big screen.
. . . You were certain the striped dress was blue and black, not white and gold.
. . . For the first time, you had to keep track of whether you offered your full-time employees health coverage in accordance with the ACA.

[Free Member Webcast—​ACA Strategy: Employer Shared Responsibility Payments, December 6, 2017] 

Wait. . . . What? Yes, 2015 was a year some applicable large employers (ALEs) would like to forget. They were struggling to count their full-time equivalent employees and who they offered health care coverage to. Why? Because they knew that in early 2016, they had to report this information to the IRS on Forms 1094-C and 1095-C.

Don’t remember doing that? The IRS remembers. And now, in late 2017, it is sending employer mandate penalty notices to employers that may owe money under Internal Revenue Code Section 4980H. Did your organization offer health coverage to eligible employees each month in 2015? Dig out your records. You should also consider seeking legal counsel from an employee benefits attorney if you receive one of these notices.

Here’s an excerpt from the 226J letter, and a link to the official sample.

The Letters 226J will include Form 14764 for responding. If you receive a 226J, don’t panic. Instead, fill out Form 14764 as soon as possible and send it back to the IRS, whether or not you agree with its information.

Here are questions and answers from the IRS on responding to Letter 226J, and here are some newsletters from Accord Systems and Hub International with more detailed information:

Lois Gleason, CEBS
Senior Information/Research Specialist at the International Foundation