Employee Benefit Consultants,
Risk Managers and Administrators

Since 1976

December 2017 Newsletter

IRS Sends Clear Signal About Employer Shared Responsibility:

Supplement to November’s Newsletter

This is a follow-up to last month’s letter regarding the IRS announcement that they plan to issue letters (IRS Form 226J) informing applicable large employers (ALEs) of their potential liability for an employer shared responsibility payment for the 2015 calendar year.  We have recently obtained new information that may be helpful. 

Below are a few items to keep in mind when completing the response to the IRS.

There is a narrow response time. 

The response to Letter 226J will be due by the response date shown on Letter 226J, which generally will be 30 days from the date of Letter 226J.  The Letter will contain the name and contact information of a specific IRS employee that the ALE should contact if the ALE has questions about the letter.  It is suggested that any person who handles mail for the group be advised to look specifically for this letter.

Keep in mind 2015 transition relief:

  • There was an extended transition period for employers with 50-99 full-time equivalent employees, so they won’t be subject to penalties until 2016
  • There was a temporary rule for employers with 100 or more full-time employees, so the largest penalty will not apply for 2015 if the employer offers coverage to at least 70% of its full-time employees (rather than 95% as will be required after 2015)
  • Employers with fiscal plan years were able to begin compliance with the employer mandate and avoid penalties at the start of their plan years in 2015 (for example, July 1 2015), rather than on Jan. 1, 2015.

The IRS determination of whether an employee may be liable for an ESR payment is based on two things:

  • Information reported to the IRS on Forms 1094-C and 1095-C and,
  • Information about full-time employees of the ALE that were allowed the premium tax credit.

Who Will Receive the Letter?

 The IRS plans to issue Letter 226J to an applicable large employer (ALE) if IRS determines that, for at least one month in the year, one or more of the ALE's full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed (and the ALE did not qualify for an affordability safe harbor or other relief for the employee).  

According to the letter, the letter certifies that for at least one month in the year, one or more of an employer's full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed.  The letter explains the proposed employer shared responsibility payment (ESRP) and what an employer should do if he/she agrees or disagrees with this proposal.  

Even if you have not resolved whether to agree or disagree with the Information presented on the 226J, respond to the letter

An employer must tell the IRS whether the employer agrees or disagrees with the proposed ESRP by the response date on the first page of the letter.  If the group disagrees with the proposal, or is not sure, it is suggested to respond within the 30-day timeframe with a brief explanation. No response may incur a ( or an additional) penalty.

What is in the letter?

The letter explains what to do if the employer agrees with the proposed ESRP or disagrees with the ESRP and includes: 

  • an employer shared responsibility payment summary table itemizing the proposed payment by month and indicating for each month if the liability is under section 4980H(a) or section 4980H(b)
  • an employer shared responsibility response form, Form 14764, "ESRP Response,"
  • an "Employee Premium Tax Credit (PTC) List", Form 14765.  It lists, by month, the ALE's assessable full-time employees (individuals who for at least one month in the year were full-time employees allowed  a premium tax credit and for whom the ALE did not qualify for an affordability safe harbor or other relief (see instructions for Forms 1094-C and 1095-C, Line 16), and the indicator codes
  • a description of the actions the ALE should take if it agrees or disagrees with the proposed employer shared responsibility payment in Letter 226J, and
  • a description of the action the IRS will take if the ALE does not respond timely to Letter 226J. 

In a number of FAQs posted on the IRS website, the IRS addresses the procedure for responding to a proposed payment.  This URL includes links to the FAQs:  https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions

The First Digital Tablet Approved

The first oral tablet with a digital ingestible tracking system has been approved. Aripiprazole tablet with sensor, Abilify MyCite® by Otsuka and Proteus, is FDAapproved for the treatment of adults with schizophrenia, bipolar I disorder, or major depressive disorder.

The product contains a 1 mm sized event marker sensor embedded in the oral aripiprazole tablet. The sensor, which is digested by the body, contains magnesium and copper that reacts with gastric fluid to generate an electrical signal. This signal is transmitted to a wearable battery-operated patch, which then transmits the data to a mobile application (MyCite® App) allowing patients to track when the dose was taken on a compatible smartphone.

With the patient’s permission, caregivers and healthcare providers (HCPs) may also access the information via a web-based portal. Patients and HCPs must receive proper training on how to use the system. It has not been established if Abilify MyCite can improve patient compliance.

This novel drug-device system may provide valuable information to help decision making for physicians and their patients with serious mental illness. A limited rollout of Abilify MyCite to select health plans and HCPs is planned to enable the manufacturer to solicit and respond to feedback from stakeholders.

Information from:   Magellan Health MRx Clinical Alert, December 2017 www.magellanrx.com


All of us at Tucker Administrators wish you a happy holiday and continued success in 2018

Thank you for your business and as always, we are at your service.

We look forward to continuing our relationship for years to come.

 Our office is closed on the following dates for the Christmas and New Year Holiday:

Monday, December 25 and Tuesday, December 26 
Monday, January 1 and Tuesday January 2, 2018

May You Have Peace and Joy this Holiday Season

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Contact Us

Tucker Administrators, Inc.

3800 Arco Corporate Drive
Suite 450
Charlotte, NC 28273

Phone: 704-525-9666
Fax: 704-525-9534