Pay or Play Penalties Will Increase for 2019 & 2020

The IRS has updated their Questions and Answers (Q&As) on the employer shared responsibility rules under the Affordable Care Act (ACA), to include adjusted penalty amounts for 2019 and 2020.

According to the FAQs, the penalty amounts will be increased as follows:

  • For calendar year 2019, the adjusted $2,000 amount is $2,500 and the adjusted $3,000 amount is $3,750.
  • For calendar year 2020, the adjusted $2,000 amount is $2,570 and the adjusted $3,000 amount is $3,860.

Employers that owe a pay or play penalty will receive a Letter 226-J from the IRS, which will propose and assess the applicable penalties. The IRS began issuing Letter 226-J to employers in late 2017 to propose and assess pay or play penalty liability for the 2015 calendar year. For 2016 calendar year liability, the IRS began issuing Letter 226-J in 2018.

Employers subject to these rules should ensure that they are offering the required coverage, or they may face increased penalties for each year in which they fail to comply.

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It is our goal to guide you through ongoing change. Questions? Contact the Creative Benefits team at 866-306-0200.