The Affordable Care Act: Wounded, But Still Delivering a Bite

By: Christine M. Moehl, Employee Benefits Lawyer

Although Congress recently made changes to the requirement that individuals maintain health coverage under the Affordable Care Act (ACA or Obamacare), Congress did not make any changes to ACA provisions affecting employers. Instead, Federal agencies charged with administering the employer-related provisions of the ACA have continued to move forward with refining the law through issuance of new notices and regulations. Most recently, the IRS has quietly begun assessing penalties on employers who it deems to be out of compliance with the ACA. This means that employers must continue to monitor ACA developments and stay abreast of current changes in the law. The following are two important ACA developments that employers should be aware of:

1. Extended Due Date for ACA Coverage Forms
In IRS Notice 2018-06, the IRS extended the due date for certain employers to furnish ACA coverage forms to their employees. The original due date of January 31, 2018 for Applicable Large Employers (ALEs) to provide 2017 Form 1095-Cs to their full-time employees was extended to March 2, 2018. In addition, employers who offer self-insured health coverage to their employees now have until March 2, 2018 to provide Form 1095-Bs to covered individuals. The IRS extended the due date for these forms because they determined that many employers needed additional time to gather information and complete the forms accurately.

2. IRS Penalties Are Being Assessed
The IRS has begun contacting ALEs regarding potential Employer Shared Responsibility Payments (ESRPs) for 2015. The potential ESRP amounts are communicated to ALEs via a notice called Letter 226J, which indicates whether the IRS believes that the ALE owes the “A” penalty or the “B” penalty. The letter also includes several attachments, including the Employer Premium Tax Credit Listing, a Penalty Summary Table, and a response form.

The most important thing an ALE should do upon receiving a Letter 226J is act quickly. The IRS only allows the ALE 30 days to respond to the letter. Failure to respond timely may result in the IRS assessing the ESRP and issuing a notice and demand for payment without any further opportunity for the ALE to respond. The ALE should immediately forward the letter to its appropriate service providers, including vendors that furnished their ACA forms to employees and legal counsel. The service providers should then review the letter and all attachments thoroughly to determine if the information reported by the IRS is accurate. If the ALE disagrees with the information reported in the letter, it should respond via the response form included with the letter. The ALE should also include backup documentation supporting its representations on the response form.

This move by the IRS to begin assessing penalties drives home the importance for employers to accurately complete the ACA reporting forms for their employees. Inaccurate or incomplete forms may result in inaccurate ESRP assessments, as well as penalties for erroneous reporting. Please contact a member of the Employee Benefits group at Saalfeld Griggs if you have questions about your reporting obligations or recent developments under the ACA.

2 Comments

  • Benjie Brown says:

    Does all this apply to small employers?

    • sglaw says:

      That’s a great question. Employer reporting requirements only apply to (1) employers with over 50 full-time equivalent employees (FTEs), or (2) employers of any size with self-insured health plans. In addition, employer penalties under the ACA only apply to employers with over 50 FTEs.

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