The IRS has been sending letters to certain employers to request information about whether they satisfied their ACA reporting obligations for 2015 and 2016. Specifically, the letter is entitled “Request for Employer Reporting of Offers of Health Insurance Coverage” or “Letter 5699.”
The ACA’s employer mandate requires Applicable Large Employers (“ALEs”) to identify and offer affordable health insurance coverage to all full-time employees (i.e., those working 30 hours or more per week). ALEs are employers with 50 or more full-time or full-time equivalent employees that were required to offer Minimum Essential Coverage to at least 95% of their full-time workforce and their dependents for the year in question.
The ACA’s employer mandate also requires ALEs to file information returns (i.e., Forms 1094-C) with the IRS and to provide statements to their full-time employees (i.e., Forms 1095-C) relating to whether the employees (and their dependents) were offered health insurance from the employer, and if so, to provide certain details about that health insurance coverage.
In general, ALEs were required to offer health insurance coverage to their full-time employees beginning in 2015 and begin filing the Forms with the IRS in 2016.
The IRS is now sending Letter 5699 to employers it believes were ALEs that may have failed to submit the required Forms. In particular, Letter 5699 requests that the employer confirm the name and Employer Identification Number it used when filing the Forms along with the date such filing was made. Letter 5699 also reminds employers that there are penalties for failing to file the Forms.
Responding to Letter 5699
Employers must respond to Letter 5699 within 30 days of receipt. ALEs that have not filed the Forms for the 2016 reporting year can provide them to the IRS with their response to Letter 5699. Alternatively, ALEs that have not filed the Forms can commit to filing them within 90 days of the date of the letter. In either case, the ALE must also explain the reason for the late filing.
Employers that receive Letter 5699 may also respond by either: (i) claiming that they were not an ALE for the year in question; or (ii) explaining why they did not file the Forms and any actions they plan to take to remedy the failure.
Employers that receive IRS Letter 5699 should carefully review the Forms that they filed (if any) for the year indicated in the letter. Employers that have specific questions or require specific advice regarding the best response to Letter 5699 should engage qualified counsel for assistance.