IRS Confirms ACA Penalties Still Apply

Recently, the Internal Revenue Service released an information letter regarding the Affordable Care Act’s employer shared responsibility (pay or play) penalties. The information letter is intended to clarify the applicability of the penalties in light of President Trump’s 2017 executive order broadly directing federal agencies to waive, delay or grant exemptions from ACA requirements that may impose a financial burden.

The information letter:

  • Confirms that the ACA’s pay or play penalties continue to apply to applicable large employers (ALEs) that fail to offer affordable, minimum value health coverage to their full-time employees (and dependents).
  • Indicates that the law does not provide for any waiver of the pay or play penalties.
  • Reiterates that, while several forms of transition relief were available for 2015 and 2016, no transition relief is available for 2017 and future years.

This information letter confirms the IRS’ position that the executive order does not change the law, and that the ACA’s provisions are still effective until changed by Congress. As a result, the ACA’s pay or play penalties still apply. ALEs must continue to comply with this requirement, including paying any penalties that may be owed.