Letter 226-J - Employer Shared Responsibility Payment Letter

The IRS began sending out notices to Applicable Large Employers if they were determined to owe an Employer Shared Responsibility Payment (ESRP) based on their Affordable Care Act filings. Employers owe a ESRP if:

  • The company did not offer minimum essential coverage (MEC) to at least X% of its full-time employees (and their dependents) and at least one of its full-time employees was certified as being allowed the Premium Tax Credit (PTC); or?
  • You offered EC to at least X% of your full-time employees (and their dependents), but at least one of your full-time employees was certified as being allowed the PTC (because the coverage was unaffordable or did not provide minimum value, or the full-time employee was not offered coverage).?

The letter outlines instructions on how to handle if the company agrees or disagrees with the ESRP. If the company is in agreement, there will be instructions on how to make the payment. If the company does not agree, an appeal process is outlined. 

Zenefits will not assist clients with handling communication with the IRS in relation to this letter. The company is responsible for completing the appeals process and/or paying the ESRP. For guidance on how to proceed, please contact legal counsel or a tax advisor. Companies can also contact the IRS directly with questions here.

Zenefits is happy to provide medical offer of coverage and enrollment information, if we have access to it, for your appeal process as needed. Please reach out to our Support team with the information required.

For additional details regarding Letter 226-J, check out the IRS’s site here
Guidance on what Employer Shared Responsibility Penalties are can be found in our Help Center here.

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