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Compliance Q&A: Employer Mandate Penalties 226J


In 2017, the IRS began sending “Letters 226J” to enforce the Employer Shared Responsibility (ESR) mandate. Under the ESR provisions, Applicable Large Employers (ALEs) are required to offer minimum essential coverage to substantially all of their full-time employees and their dependents.  ALEs are also required to offer minimum value, affordable coverage to full-time employees. Penalties are triggered when employees receive subsidized coverage on an Exchange by way of a premium tax credit. The IRS will assess proposed penalties through the Letter 226J if an ALE’s IRS Forms 1094-C/1095-C show that the employer failed to meet either of the ESR requirements.

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