If you are researching this topic, then you may have received a letter from the Department of Treasury Internal Revenue Service with regards to Employer Shared Responsibility Payment (ESRP).
Under the Affordable Care Act’s employer shared responsibility provisions, large companies are required to offer affordable health insurance coverage that meets the requirements of the ACA. This rule is also referred to at the employer mandate, which applies to companies with 50 full time employees or the full-time equivalence for the previous calendar year.
The employer shared responsibility penalty took effect in 2015, but there were multiple delays to give businesses time to comply.
An employer may be subject to ESRP, if one or more full time employees obtained a tax credit through a state or federal market place. The employee was eligible for the tax credit because the employer did not offer a group health plan, or the plan was deemed unaffordable. The IRS started to issue these letters the 4th quarter of 2017.
The letter states, under section 1411 of the ACA, that for at least one month of the year, one or more of your full-time employees was enrolled in an individual health plan that was eligible for tax credits or subsidies.
In the letter, it will state which employee/s had the tax-credit and for how many months. In that summary table, it will indicate the penalty.
At this point, take a deep a breath if you did offer a group health insurance plan. You have the right to appeal! One thing to keep in mind, during years 2015 & 2016, the marketplaces were slow to verify eligibility for tax credits. It was more like a “free for all” as the marketplace was unable to certify a employers group health plan meeting ACA requirements. Another issue was these were the first years some employers starting to file ACA reporting requirements. It is very possible that an employer or the firm they hired made an error on the filing. It’s also quite possible that the filing was missing information, so the ESRP is being sent as default letter.
Since these letters are just now starting to hit Indiana businesses and the rest of the country, it should be interesting how many appeals win.
One thing is for certain, the IRS is going to hold business accountable for employer shared responsibility tax.