What is ACA Penalty Relief?
The IRS issues ACA penalties when an employer fails to comply with health coverage reporting requirements under the Affordable Care Act.
Common ACA penalty letters include:
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Letter 5699 – Inquiry about whether you are an ALE (Applicable Large Employer)
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Letter 226-J – Assessment for failing to offer affordable coverage.
With the recent 2024 Employer Reporting Improvement Act, employers now have 90 days to respond to ACA penalty notices—giving you more time to make your case.
Why ACA Penalties Matter
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ACA penalties can cost employers thousands—even hundreds of thousands—of dollars.
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Section 4980H(a): Up to $2,970 per full-time employee (2025) if no offer of coverage was made
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Section 4980H(b): $4,350 per employee who received a subsidy
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Incorrect or late 1095/1094 forms: Up to $560 per employee
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These penalties can often be reduced or eliminated—but only if you respond correctly and on time.
Penalties can reach six figures—don’t wait to act.
Our Relief Process
Here’s how ACA 360 helps you challenge penalties and reduce liability:
Review Your IRS Letter – We analyze the notice and identify your options.
Build Your Case – Using IRS criteria: Reasonable Cause or First-Time Abate.
Track and Appeal if Needed – We stay involved until your case is resolved.
Gather Documentation – Offers of coverage, payroll, and compliance data.
Submit Response to IRS – Complete, professional response within 90 days.
Prevent Future Penalties – Compliance audits and tracking strategies.
Why Employers Receive ACA Penalties
ACA penalties are often triggered by:
Incorrect or missing safe harbor codes on Form 1095-C
Failing to file or distribute 1095 forms on time
Misclassifying full-time vs part-time employees
Not offering affordable, minimum essential coverage
Data errors due to payroll/reporting software limitations
Don’t let simple errors cost you tens of thousands—let us help.
Client Success
We are very grateful for ACA 360's responsiveness, precision, and the level of expertise they brought to our corner.
ACA 360 saved our business thousands in penalties, kept our doors open, and employees with jobs.
Owner, Local Restaurant
Stay Informed: New IRS Rules Could Help You Eliminate or Reduce Penalties
Update #1: New 90-Day Response Window for IRS Letters (Effective 2024) As of December 2024, the IRS now gives Applicable Large Employers (ALEs) 90 days to respond to ACA-related penalty letters, including Letter 226-J and Letter 5699. This extended window gives your organization more time to gather documents, prepare a complete response, and request penalty relief through Reasonable Cause or First-Time Abatement.
Update #2: Date of Birth May Be Used Instead of SSN for TIN Matching If you are unable to obtain an employee’s Social Security Number (SSN), you may now use Date of Birth (DOB) to meet IRS requirements for 1095-C filing. This flexibility helps employers reduce TIN Matching Errors and avoid 972CG penalties for missing or incorrect information. However, this is only allowed if you can document multiple, good-faith attempts to collect the SSN.
Update #3: Electronic Delivery of 1095-C Forms Allowed with Consent Employers can now electronically deliver Forms 1095-C to employees if they’ve received affirmative consent. This change reduces printing and mailing costs and is especially useful for remote or seasonal workforces. Note: You must still provide paper forms if the employee declines e-delivery or fails to respond.
Update #4: Indexed Penalty Amounts for 2025 The IRS has adjusted ACA penalty amounts for inflation in 2025: Section 4980H(a): $2,970 per full-time employee Section 4980H(b): $4,350 per subsidized employee Form Penalties (6721/6722): Up to $560 per form if not filed correctly or on time Knowing these updated thresholds is crucial to understanding your potential risk exposure.
Update #5: Additional Relief from the Employer Reporting Improvement Act The Employer Reporting Improvement Act, passed in 2023 and effective for tax year 2024, includes: A single Form 1095-C submission requirement for all employee types Unified electronic delivery procedures Elimination of the need for duplicate paper filings under certain conditions These changes simplify reporting but require timely system updates and documentation procedures.
We Know ACA Penalty Relief Because It's What We Do
At ACA 360, we’re not a payroll company with a side offering or a benefits broker learning as we go. We are a specialized ACA compliance firm with a proven record of helping employers eliminate penalties, stay compliant, and sleep better at night.
Deep ACA Expertise
With years of hands-on experience navigating ACA rules, codes, and IRS notices, our team delivers strategies that work—backed by real-world results and in-depth knowledge of every IRS penalty notice.
Proven Results
with IRS Letters 226-J, 5699, 972CG
Our team has helped employers save tens—and sometimes hundreds—of thousands of dollars in ACA penalties. From initial response to final resolution, we know exactly what the IRS is looking for.
Personal, Proactive Support
You won’t get routed through a call center or wait weeks for a reply. We respond quickly, communicate clearly, and guide you through every step of your ACA relief journey with confidence and professionalism.
Transparent, Flat-Fee Pricing
Full Circle Compliance Approach
Our support doesn’t stop at the penalty response. We review your historical ACA data, train your team if needed, and provide monthly monitoring options to keep you protected year-round.
TransparentFlat-Fee Pricing
No surprise charges or retainers. Our pricing is flat-rate and disclosed upfront, with options tailored for both single-location businesses and multi-FEIN employers.
Former Doyle HCM ACA Team
ACA 360 was founded by the experienced ACA leadership team from Doyle HCM. We've managed over 200 ALE accounts and bring that same white-glove service directly to you.
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Do I have ACA reporting responsibilities?If an employer averages at least 50 full-time or full time equivalent employees during the prior year, the employer is an ALE (applicable large employer) for the current calendar year and has reporting responsibilities.
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I determined I am an ALE (Applicable Large Employer) now what?If an organization is an ALE, the ACA requires it to share the responsibility of offering affordable care to employees who are considered ACA full-time and report on those offerings to the IRS.
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Who is considered a Full-time employee in the eyes of the ACA?Any employee who works an average of 30 hours per week, 130 hours per month, or 1560 hours per year regardless of their designated status.
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What is a "safe harbor" and what is it used for?ACA safe harbors are methods employers can use to demonstrate that their health plans are affordable, avoiding potential penalties, without needing to gather detailed employee income information. ACA 360 will help you choose the correct safe harbor for your business.