Obamacare Employer Mandate Penalties Arrive in the Mail

The individual mandate of the Affordable Care Act (ACA, aka Obamacare) may be expiring — in 2019 — but the employer mandate is alive and well, and companies were sent notices in November advising them of any violations and the consequent tax penalty due.

IRS-sends-out-Obamacare-tax-penalty-noticesAccording to the employer mandate provision, companies with 50 or more employees are subject to tax penalties if they don’t offer minimum essential coverage to at least 70 percent of their workers and families, and at least one employee enrolls in a federal or state marketplace and receivs a premium subsidy.

Fines are not insubstantial either. The website Modern Healthcare says it obtained a copy of one dunning letter for 2015 from the IRS that totaled $3.8 million. The letter, dated Nov. 8, gave the company 30 days to pay up or challenge the judgment.

Also according to the same site, companies are planning to fight back because a requirement of the ACA has not been met in most cases. Both the federal and state exchanges are required to send certified notices of violations to the companies before the IRS can take action. Only three state exchanges did so (and to what extent is unknown): Maryland, Connecticut and Washington. The federal exchange covering 39 states did not.

Complicating the picture is that, for years 2015 and 2016, the IRS waived the penalty for some companies, deeming those transition years. In 2017, there will be no exemptions, according to the IRS.

It’s unclear why Republicans didn’t include relief in its recent tax legislation, as it did for individuals. However, the House Ways and Means Committee has prepared legislation that would void all tax penalties due and repeal the employer mandate from 2015 forward.  So far, it has been a Republican-only initiative, but could be sent to the floor at any time.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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