IRS Sends Penalty Letters

    Please click here for a PDF copy of the article: IRS Sends Penalty Letter 226J


    The IRS is currently sending letters to inform employers of penalties due to the Affordable Care Act (ACA).  This letter, called 226J, is being sent to groups that did not offer coverage that was affordable and met the minimum essential requirements as specified by the ACA.  These groups are therefore required to make an Employer Shared Responsibility Payment (ESRP).  These penalties can be severe.  The illustration below, taken from a real letter (which was not to one of our clients), shows a penalty amount of $213,026.

    Letter 226J Penalty


    If you receive a Letter 226J, you must respond within 30 days or face penalties.  The letter provides steps to take if you agree with the proposed Employer Shared Responsibility Payment and if you disagree.  More information is available on the IRS website, located here: https://www.irs.gov/individuals/understanding-your-letter-226-j.

    If you are not in compliance with the requirements of the ACA—or if you need help determining whether you are in compliance—please contact our Employee Benefits team.  Our team has received extensive training on the requirements of the ACA and can answer any questions you have.  We can also help with developing an affordable strategy for the benefit program at your company.



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