IRS Prepares to Enforce ACA Employer Mandate

By Edward I. Leeds, Jean C. Hemphill & Laura P. Heacock on November 15, 2017

The IRS has announced its intent to begin enforcing the employer-shared responsibility provisions (otherwise known as the employer mandate or pay-or-play provisions) of the Affordable Care Act for the 2015 calendar year. The IRS also published a template letter that it will mail to any applicable large employer (ALE) if it determines the ALE owes payments under the employer mandate for one or more employees for any month. The agency also will send an explanation to ALEs detailing what to do if they receive the letter.

The letter will include:

A table that itemizes the proposed assessment month-by-month
An “employee premium tax-credit list,” which identifies each employee for whom a payment is due
A description of the actions the ALE should take if it agrees or disagrees with the proposed penalty payment
A form for responding to the assessment
The name and contact information of an IRS agent assigned to answer any questions

ALEs who agree with the IRS’s calculation may pay the amount requested. ALEs who disagree with the assessment can respond by providing proposed changes and an explanation of their disagreement. Responses will be due by the response date specified on the form, generally about 30 days from the date of the letter.

These enforcement efforts are expected to begin in the next couple of months. Regardless of whether employers expect to owe an assessment for 2015, they should look for a letter and be prepared to respond promptly. As always, it is prudent to exercise caution to ensure that the letter is from the IRS and not part of a phishing scheme.

Changes to the ACA are coming and other laws and regulations affecting health care and health benefits can be expected. Ballard Spahr attorneys established the Health Care Reform Initiative to monitor and analyze legislative and regulatory developments. We will continue to follow developments in this area as they emerge. Changes may come to the Health Care Reform Dashboard, but it will continue to serve as an online resource center for news and analysis on developments regarding the ACA and any reforms that follow.

Attorneys in Ballard Spahr’s Health Care and Employee Benefits and Executive Compensation Groups represent clients across the health care industry and counsel clients on health care, benefits, and tax regulatory and compliance issues, as well as privacy and data security, transactional, financing, benefits and compensation, and labor and employment matters.