Employers to Face Penalties for Failing to Comply With Affordable Care Act

The IRS plans to send out “play or pay” penalty letters to employers for 2015.

In early November, the IRS announced that it will be assessing penalties against employers that failed to comply with the health insurance coverage requirements of the Affordable Care Act in 2015. The IRS expects to mail a Letter 266J to all of the affected employers by the end of the year.

The Affordable Care Act, also known as Obamacare, requires larger employers to provide affordable health care coverage to their employees or pay a penalty called the “employer shared responsibility payment” (ESRP). Only employers with the equivalent of 100 or more full-time employees were subject to this requirement in 2015. These employers were required to provide affordable health coverage to at least 70% of their full-time employees during the year. (For purposes of the ACA, a full-time employee is one who works at least 30 hours per week.)

Employers that receive a Letter 266J from the IRS must either pay the estimated penalty or contest it by the stated deadline, typically 30 days. To learn more, and to read a sample of the letter, see Understanding Your Letter 266J at the website of the IRS.

Effective Date: November 2017