20 Jan Has Your Company Received the IRS Letter 226-J for Pay or Play Enforcement?
The IRS has been sending pay-or-play enforcement letters this year, and last year. Listed below, is an explanation of what that means for businesses with over 50 employees.
In 2018, the IRS began sending enforcement letters related to employers and their compliance with the shared responsibility rules, regarding health care insurance and benefits. The affordable healthcare act is being enforced, and these letters are a written demand to imply, with a time-frame of expectation. The letters are informing employers of their potential liability for employer shared-responsibility or enforced penalty.
Who gets the letters: These letters are only sent to employers who are subject to the shared responsibility rules. The determination of if the rules apply, are outlined in the letter 226 – j.
What to do if you have received the letter 226-j: If you have received a letter, you can try to answer it on your own, following the specific rules that are outlined on the letter. The second option is to seek help, by making sure that your business is in compliance- before you answer the letter. You can call Synergy Benefits and let us help you through this situation.
Employers that receive the letter 226 j must respond to the letter either agreeing with the penalty or disagreeing and turning in the required documents to support their claim.
The IRS provides an employer response form. (This is form 14764). The IRS also maintains a website regarding the standards that businesses must meet, in regard to letter to 226-J. The affordable healthcare act employer shared-responsibility rules require the employer to offer affordable minimum value health coverage to their full-time employees, or they must pay a penalty. These are known as the employer mandate or pay-or-play rules. These apply to employers (on average) with at least 50 full-time employees.
The employer shared responsibility rules took effect for most ALE’s, depending beginning on January 1st, 2015. The IRS began sending letters in late 2017 to inform employers of the intent to pay or play.
Employers must answer the letter within the allotted time frame or they may face a penalty. Letter 226 j includes the stipulations that the employer should comply to. The letter will explain the employer shared-responsibility rules and it will summarize the shared responsibility penalty table.
If your company needs assistance navigating the compliance of this letter, or other benefit needs, contact Synergy Benefits. We can help you manage your HR needs and your benefits package for your employees. Together, we can find a benefits package that suits the needs of your company size and desired benefit offerings.