Rev. Proc. 2023-17 (Mar. 9, 2023)
Available at https://www.irs.gov/pub/irs-drop/rp-23-17.pdf
The IRS has announced 2024 indexing adjustments to the applicable dollar amount used to calculate employer shared responsibility payments under the Affordable Care Act. As background, applicable large employers (ALEs) may be liable for an employer shared responsibility penalty under Code § 4980H(a) if they fail to offer minimum essential coverage to a sufficient number of full-time employees. Alternatively, ALEs may be subject to a Code § 4980H(b) penalty if they offer minimum essential coverage to the required number of full-time employees, but the offered coverage is not affordable or does not provide minimum value. The adjusted penalty amount per full-time employee for failures occurring in the 2024 calendar year will be $2,970 under Code § 4980H(a) (a $90 increase from 2023) and $4,460 under Code § 4980H(b) (a $140 increase from 2023). (Current and previous penalty amounts are available on an IRS Q/A page.)
EBIA Comment: As a reminder, the IRS uses Letter 226-J to inform ALEs of their potential liability under Code § 4980H (see our Checkpoint article). A response form (Form 14764), generally due within 30 days, is included with Letter 226-J so that an ALE can inform the IRS whether it agrees with the proposed penalty. Employers and their advisors should be on the lookout for this letter so that they are prepared to promptly review and respond. For more information, see EBIA’s Health Care Reform manual at Section XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”). See also EBIA’s Form 1094/1095 Workbook at Section XV (“Penalty Assessment”).
Contributing Editors: EBIA Staff.
