Have you received a subsidy notice? If not, be on the lookout. In late June 2016, the Department of Health and Human Services (HHS) started mailing notices to employers alerting them that one of the employer’s employees was certified as eligible for a premium tax credit (subsidy) through the federal Health Insurance Marketplace.
If you are in a state with a state-run exchange, you may have received these notices back in 2015. However, this will be the first time the notices are being sent from the federal exchange and for the first time from states that have a federally-operated exchange. For a complete list of the exchanges by state, visit the State Health Insurance Marketplace Types site. In September 2015, the Centers for Medicare and Medicaid Services (CMS) announced that subsidy notices would not go out for 2015, meaning employers will first hear of the subsidy from the IRS when they issue employer penalties. There will be no employer subsidy appeal process for 2015.
The notices currently being mailed are for those employees that received a subsidy for “at least one month in 2016.” The notices alert the employer that the employee said 1) they weren’t offered health care coverage, 2) they received an offer of healthcare that was either unaffordable or didn’t provide minimum value or 3) they were in a waiting period and could not enroll.
To Appeal or Not to Appeal?
Once a notice is received, the employer must decide if they should appeal the subsidy or not. Receiving a notice means that your company may be liable for the employer-shared responsibility payment. The marketplace subsidies and employer penalties are separate, though the notices may be an early indicator that a penalty is on the way.
Appealing may give you peace of mind knowing that you’ve taken the first step toward fighting a tax penalty. If you appeal, do so promptly as you have 90 days from the date on the notice. It would be a good idea to alert others in your company that the notices are on the way as they may not go to your corporate office or to an address convenient for HR. Notices are being sent to the address provided by the employee at the time they applied for a subsidy.
Once the notice is received, review the employee’s records to determine if coverage was offered and if so, if it was affordable and offered at minimum value. If the coverage offered was affordable and meets minimum value, you can appeal. Keep in mind that if a minimum value “lite” or “skinny” plan was offered under special “grandfathered” rules, you won’t be assessed the “b” penalty even if your employee gets a subsidy. You can only appeal if the plan offered was both affordable and meets minimum value. If you are unsure whether your plan meets these requirements, contact your insurance provider. You can find your state’s appeal form on the HealthCare.gov website.
Depending on the number of notices received, the appeals process could take some time and work to complete – and no one is looking for more work related to administering ACA. It is important to note that the exchanges cannot issue the tax penalty and that those will be issued only by the IRS. For that reason and others, some companies are choosing to forgo the appeals process and will instead challenge any penalties if assessed by the IRS.
Ultimately you will need to decide the best course of action for your company and determine if it is worth the effort to appeal employee subsidies.
For more information, please review the resources below:
Compliance Questions or Suggestions? Email us at Compliance@avionte.com