The IRS has recently begun sending Letter 226J to ALEs they believe failed to provide minimum essential coverage that was affordable to one or more eligible employees during a prior filing year. If you received one of these forms, please carefully review the following information.

 

Why are you receiving this form?

The IRS has determined that one or more of your employees was given a Premium Tax Credit (PTC) in for at least one month in which you reported them working full-time. Because the employee was reported as full-time, they should have been offered your employee health coverage and would have been ineligible for a PTC.

 

Based on this, the IRS has determined that either you did not offer coverage to the eligible employee(s), or the coverage you offered was unaffordable. Therefore, you are being charged an Employer Shared Responsibility Payment for failing to provide the required coverage.

 

For more information regarding the Employee Shared Responsibility Provision, see the IRS Q&A.

 

What should you do?

Carefully review all the information provided within your letter and compare it to your own records.

 

  • If you agree with their assessment, complete the Form 14764 provided, sign it, and return it to the IRS along with your penalty payment.

 

  • If you disagree, complete the provided Form 14764, ESRP Response, provide a full explanation of your disagreement and/or indicate changes needed on Form 14765, and return it to the IRS by the date listed on the first page of your letter.

 

The IRS also advises that you:

  • Review the information you reported on Forms 1094-C and 1095-C for the applicable year to confirm that the information filed with the IRS was accurate. The IRS uses that information to compute the ESRP.
  • Keep a copy of the letter and any documents you submit.
  • Contact the IRS using the information provided in the letter if you have any questions or need additional time to respond.
  • Send the IRS a Form 2848 (Power of Attorney and Declaration of Representative) to allow someone to contact the IRS on your behalf. Note that the Form 2848 must state specifically the year and that it is for the Section 4980H Shared Responsibility Payment.


ACA Track can help

If you need to review your 1095-C forms, please contact your Project Manager. ACA Track can provide you with a copy of the relevant 1095-C forms you filed, so you can validate the information on your 226J letter.

 

ACA Track cannot file a response on your behalf, nor can we provide any legal or tax advice regarding how best to respond. However, we are happy to answer any other questions you may have regarding past filings for which we provided services.