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Question: I received a 226-J letter for health insurance employer mandate penalties. What’s it about, and what do I do?

Answer: Thousands of employers are now receiving these letters – and the sticker shock can be big! The 226-J letter typically starts off with a penalty estimate, and then lists each full-time employee, by month, who received a premium tax credit (PTC) to buy an individual plan on a government exchange. Employers who want to avoid penalties have the burden of proving they made offers of affordable, minimum-value coverage to qualifying employees. Employers who have records to prove they offered a qualifying plan, but the full-time employee turned it down, are off the hook.

If you receive a 226-J letter, a few words of advice:

Don’t ignore it. If an employer fails to respond within 30 days, the IRS will assume they agree with the penalty assessment and move forward to collect it.

Talk to your team. Consult with your broker or benefits provider, tax adviser and legal experts to make sure you understand the issues that triggered the letter and know your options for disputing the proposed assessment.

Correct what you can. The problem that triggered your letter may be a data-entry error or data-transmission issue in the reports filed with the IRS, or a simple mistake. These can often be fixed easily.

Clinton is available to answer your questions regarding health care, benefit options, policy, and compliance. We have also featured some of the most Frequently Asked Questions on health care from the industry.

Take advantage of this new resource, and Ask the Expert your questions today. 

For more information, watch the Protect yourself from IRS-issued 226-J letters webcast.