Stay Compliant and Save Money: 2 Secrets for Beating 226-J Penalties

Are you familiar with the IRS penalty notice, the 226-J letter?

In this article you’ll learn what it is and why you need to be aware of it.

If you have clients who are considered an ALE (Applicable Large Employer) and are found to be out of compliance with the mandated Affordable Care Act reporting and filing, they could be audited.

They will also receive a penalty notice from the IRS in the form of the 226-J letter, mentioned above.

In addition, they’ll be given about 30 days to respond to the letter. It’s a very short turnaround time and the IRS is banking on the fact that they won’t be able to gather the information in time, therefore, they’ll be required to pay the penalty.

Who are they going to blame? Yeah, you.

If you have clients with 50 or more employees you need to run their employee roster through a full-time equivalent (FTE) calculator. The calculator will tell you how many full-time equivalent employees they have.

If your client is an ALE, they are required to offer minimum essential coverage to 95% of those full-time equivalent employees. They must also prove that they've offered them an affordable minimum value plan.

If they don’t offer minimum essential coverage or a plan of minimal value and an employee receives a tax subsidy by purchasing a health insurance plan through the state exchange, your client will pay a penalty.

Please don’t overlook this. This is serious and could cost you a loyal client or two.

If you would like to know more about how to get out ahead of these types of audits and ensure your clients remain compliant, Iet’s connect. I can connect you with one of the best ACA attorneys in the business.

We can also support you if one of your clients gets a 226-J letter.

At Evolved Benefits, we’ve got your back!

Visit Evolved Benefits to learn more.