First of all, I’m sorry a few of our schools received an ESRP from the IRS, but am extremely appreciative of the work put into responding. As well, I was pleased to see that the overwhelming majority of errors were just data issues and not a result of measuring and/or offering of coverage.
With that said, you can expect to receive a response from the IRS in the form of a Letter 227. Unfortunately, I do not have any sense of when you might receive a response so please stay diligent and ask others (who may receive this response) to do the same. Maestro provided me the following information regarding the type of Letter 227 you might receive:
IRS Response to Employer Appeal Using Letter 227:
Attached IRS Employer Mandate Penalty Guidance 2019.docx is included for this section.
The IRS will acknowledge receipt of Form 14764 with one of 5 versions of Letter 227, which will close an ESRP inquiry or provide information on next steps. The 5th letter, which is not highlighted below, is the response to an Employer Appeal if any get to that point. Here are the letters:
- Letter 227-J acknowledges receipt of the signed agreement Form 14764, ESRP Response, and that the ESRP will be assessed. After issuance of this letter, the case will be closed. No response is required.-Basically you agree to pay the penalty no defense.
- Letter 227-K acknowledges receipt of the information provided and shows the ESRP has been reduced to zero. After issuance of this letter, the case will be closed. No response is required. Yay! this is the letter you want!
- Letter 227-L acknowledges receipt of the information provided and shows the ESRP has been revised. The letter includes an updated Form 14765 (PTC Listing) and revised calculation table. The ALE can agree or request a meeting with the manager and/or appeals.
- Letter 227-M acknowledges receipt of information provided and shows that the ESRP did not change. The letter provides an updated Form 14765 (PTC Listing) and revised calculation table. The ALE can agree or request a meeting with the manager and/or appeals.
In addition to the above and specifically for ongoing administration of the ACA, here is some guidance about ‘Your Proof of Offer’ documentation:
Proof of Offer (for future 226J letter):
First and foremost, remember the Employer’s requirement to provide employees with the DOL’s Marketplace Notice (most current version linked here). The ACA requires employers to provide all new hires, regardless of full-time or part-time status, with written notice about the ACA’s health insurance exchanges (i.e. the Marketplace Notice). The DOL considers a notice to be provided “at the time of hire” if the notice was provided within 14 days of the employee’s start date. There is NO requirement to provide this annually to all ongoing employees – however, it would be advisable to include this with your annual enrollment materials.
The Internal Revenue Code and related regulations require maintaining records to substantiate information shown on a return filed with the IRS and making those records available to the IRS upon request. The Form 1094-C and 1095-C instructions state that filers have the ability to reconstruct the data reported to the IRS for at least three years from the due date of the returns.
In general, the reporting rules do not identify specific records that must be maintained. It is up to each employer to identify the specific records within their organization that reflect that information. Here are some guidelines to consider when deciding which records to maintain.
For an offer of coverage, the employer should maintain records that:
- demonstrate that it has met the general elements of an “offer of coverage,” and
- substantiate the specific terms of the offer of coverage.
For the general elements of an offer of coverage, the employer should maintain records demonstrating that:
- The employee had an effective opportunity to elect to enroll in the coverage at least once with respect to the plan year. Records may include open enrollment materials showing that the employee had adequate notice of the offer of coverage and the period of time during which the offer could be accepted.
- The employee had an effective opportunity to decline to enroll in the coverage.
- Coverage for a calendar month was available to the employee for every day of the month (or, in the case of a calendar month in which a full-time employee terminated employment, coverage would have been available for the entire month had the employee been employed for the entire month).
The best document to meet these requirements would be a copy of the employees enrollment confirmation statement, if one is provided.
An alternative would be to create good business records reflecting the process by which the offers of coverage were made (i.e., how were enrollment materials communicated to employees?) and the persons who received offers of coverage. Those records should be supported with a contemporaneous declaration from a responsible employee describing the time and manner in which the offers were made.
|Examples: Documenting Offers of Coverage. Assume an employer makes offers of coverage during its open enrollment period by mailing an enrollment package to each eligible employee one week before the open enrollment period begins. These offers of coverage might be documented by: (1) retaining a copy of the enrollment package,|
(2) attaching a description of the employer’s procedures for distributing the enrollment packages,
(3) attaching a list of the employees to whom the packages were distributed, including their mailing addresses, and
(4) attaching a contemporaneous declaration from the responsible employee stating that the regular procedures were followed.
A similar practice can be followed when enrollment is done electronically; e.g., by notifying employees by email that enrollment materials are available. The employer may document offers of coverage by:
(1) retaining a copy of the online enrollment materials,
(2) attaching a description of the procedures for notifying employees by email (or other means) of the availability of enrollment materials,
(3) attaching a list of employees who received email notifications (with a list of their email addresses) or other notifications (e.g., regular mail for employees who requested paper enrollment materials), and
(4) a contemporaneous declaration from the responsible employee certifying that the regular procedures were followed.
2017 Tableau Reports (from Laura at Maestro)
As we have previously indicated, Laura Cougar has run all of our 2017 ACA reporting data through the ‘Tableau’ reporting and will be sending your report in the coming days. This review/report was not available until the 2018 reporting year and has been very helpful in assisting us in identifying anomalies in our ACA reporting data at Maestro. In light of our recent ESRP letters and the fact this wasn’t available in 2017, Maestro was willing to re-run our 2017 data through this process. Please let myself or Laura know if you have any questions once you receive a report.
Lastly, except for Shared Service Schools, everyone should be transmitting 2019 data!