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IRS Guidance Clarifies Impact of Executive Order on ACA Mandate Penalties

On Behalf of | Aug 25, 2017 |

The IRS recently released four information letters to clarify and confirm that the employer and individual mandate penalties of the Affordable Care Act (“ACA”) continue to apply. The information letters were issued in response to President Trump’s Executive Order directing certain federal agencies to provide relief from the financial burdens imposed by the ACA.

Background. The ACA’s employer shared responsibility provisions require Applicable Large Employers (“ALEs”) to offer affordable health insurance coverage that provides minimum value to full-time employees or pay a penalty.

NOTE: ALEs are employers with 50 or more full-time equivalent employees during the preceding calendar year.

The ACA’s individual mandate provisions require most individuals to obtain minimum essential health insurance coverage for themselves and any dependents or pay a penalty.

Executive Order. In January, President Trump issued an Executive Order intended to minimize the ACA’s economic burden. (See the Alert of 1/26/17.) The Order directed the executive departments responsible for ACA enforcement to waive, defer, grant exemptions from or delay implementation of any ACA provision or requirement that imposes a fiscal burden on a state, or a cost or regulatory burden on individuals, health care providers and purchasers of health insurance.

IRS Information Letters. The following is a summary of the IRS Information Letters:

Letters 2017-0010 and 2017-0013. The letters clarify that the Executive Order did not amend the ACA and that its provisions with respect to the employer shared responsibility provisions remain in full force until changed by Congress.

Letters 2017-0011 and 2017-0017. The letters note that the Executive Order does not impact the application of the ACA’s individual mandate provisions and that taxpayers remain responsible for complying with the requirements of the ACA.

The Letters are available for review at: