Based on the regulations of the Affordable Care Act (ACA), Health Care Insurance Marketplaces (also referred to as Exchanges) will begin to send out notifications to certain employers when one or more of their employees enrolls in coverage through the Marketplace and is eligible for a subsidy, or Advanced Premium Tax Credit, for one or more months. In 2016 the notices will only be sent when employees provide a complete address for the employer. This means that in 2016 employers may not get notices from the Exchange for all employees who are receiving subsidies. A sample notice can be found here.
The following are some common questions many employers have about these notices.
Where are the notices sent?
In 2016 the notices will be sent to the address that the employee provides when applying for health insurance coverage through the Health Care Marketplace. This may not necessarily be your legal business address or the address on file with the IRS or other entities. For businesses with multiple locations it is very important that you notify all locations to watch for these notices as you only have 90 days to respond to each notice. The method used to determine employer address may change in future years.
How does an employee become eligible for a subsidy?
An employee can become eligible for a subsidy by attesting that they are a full time employee who was not offered and is not enrolled in affordable coverage that meets minimum value standards established by the ACA. An employee is considered to be full time under the ACA when they work an average of at least 30 hours per week. Coverage is considered affordable when the employee’s cost of employee only coverage for the least expensive minimum value plan offered is less than 9.66% of the employee’s household income. A plan meets the minimum value standard when it “pays at least 60% of the total cost of medical services for a standard population” and “its benefits include substantial coverage of physician and inpatient hospital services.” To determine whether your plan meets the minimum value requirements, there is an Employer Coverage Tool available on the healthcare.gov website.
What do we do if we receive a notice?
If the employee is a full time employee who was offered affordable coverage that meets the minimum value standard you should appeal. If the employee is enrolled in coverage you should appeal. If the employee is part time (and has not been full time during the period eligible for a subsidy) you should appeal. It is especially important for large employers with 50 or more full time equivalent employees (or smaller employers who are members of a controlled group with a combined total of 50 or more full time equivalent employees in the entire controlled group) who are subject to the pay or play mandate.
How does the appeal process work?
Employers have 90 days to appeal any notices that include incorrect information. A form is available here for employers to use for their appeal. The form includes thorough instructions that should help with completing the appeal. When submitting the initial appeal, employers can submit any evidence or documentation that supports their appeal. There will also be an opportunity to submit supporting documentation after the initial appeal is filed. Supporting documents may include a signed benefit waiver form, a payroll report showing total hours, proof of benefit enrollment, etc.
Once the appeal is received you will receive a notice acknowledging receipt from the Exchange. The employee will also receive notice that there has been an appeal filed. The appeal will be reviewed along with any additional evidence or supporting documentation provided and the Exchange will notify both the employee and employer of their decision. The decision must be made and sent in writing within 90 days from the date the appeal is received by the Exchange.
Does a notice mean that a penalty will be assessed?
No! Only the IRS has the authority to assess penalties. The notices sent from the Exchanges are completely separate from IRS penalty determinations. The IRS has a separate appeal process. That being said, you should not ignore the notices from the Exchanges because the IRS may then assume that the information provided by the employee is accurate and will therefore likely assess a penalty if you are a large employer subject to the pay or play mandate. The penalty in 2016 is $260 for each employee, each month that a full time employee is enrolled in an Exchange plan and qualifies for a tax subsidy.
When we receive a notice should we talk to the employee(s) listed on the notice(s)?
Absolutely not. There are strict retaliation rules associated with the ACA that state that an employer cannot “discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions or other privileges of employment because the employee (or an individual acting at the request of the employee) has received a credit under the ACA or reported any violation of, or any act or omission the employee reasonably believes to be a violation of the ACA.”
Final Suggestions for Employers:
Make sure that all of your locations know what to do if a notice from a Health Insurance Exchange is received. All managers should also be made aware of the anti-retaliation provision in the ACA and should not take any adverse action against an employee who receives a subsidy for health insurance.
It is also very important to maintain accurate and complete records regarding all coverage offered to each employee as well as all enrollments. For any employees who decide to not elect coverage offered through the employer, it is a good idea to have a waiver form signed by the employee to serve as documentation that the coverage was offered.