IRS Begins Issuing ACA Employer Mandate Penalty Notices

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Recently, the Internal Revenue Service (IRS) indicated that it would begin enforcing the Affordable Care Act (ACA) Employer Shared Responsibility provisions (commonly known as the “Employer Mandate”). Last week, the IRS followed through on its promise and began mailing notices informing employers of potential liability for the 2015 reporting year.

The ACA’s Employer Mandate requires that certain “applicable large employers” offer minimum essential health coverage that is affordable and provides minimum value to full-time employees (and their dependents). Generally, “applicable large employers” are employers with 50 or more full-time or full-time equivalent employees, although a 100-employee standard, rather than a 50-employee standard, was applied for 2015. Applicable large employers must also report certain health coverage information to the IRS and plan participants annually on Forms 1094 and 1095. Employers who do not offer compliant coverage may be faced with costly penalties.

Employers who may be subject to Employer Mandate penalties for 2015 will receive a notice in the coming weeks. Employers will have the option to appeal the determination before the IRS issues a demand for payment, including the option to seek a pre-assessment conference with the Office of Appeals. Employers will have the opportunity to request an extension so long as they do so within 30 days of receiving a notice. Because of the short response time provided and the potential for significant penalties, employers should be on the lookout for penalty notices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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