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New ACA Marketplace Notices to Employers Require Action

Employers of 50 or more full-time and full-time equivalents are beginning to receive new ACA Marketplace notices that state:

  • an employee has been determined to be eligible for premium tax credits or cost-sharing reductions to help pay for Marketplace coverage and has enrolled in Marketplace coverage;
  • the employer is receiving the notice because the employer may have to pay an employer shared responsibility payment (i.e., a penalty) to the Internal Revenue Service (IRS); and
  • the employer has the right to appeal the determination.

As you can well imagine, employers receiving these are often confused and sometimes frightened since the notice also contains language about IRS penalties. The employer shared responsibility penalties that may be imposed under the Affordable Care Act (ACA) are substantial, and no one wants to be responsible for failing to take action that may preclude an assessment of penalties.

So what should an employer do who receives one of these notices? First, be aware that the Marketplace is only interested in whether you believe the employee should be ineligible to receive a premium tax subsidy, not whether you as the employer should or should not be penalized under IRC Section 4980H for either not being considered to have offered coverage to that employee or having offered unaffordable coverage to that specific employee.

Second, an employer may appeal by completing and submitting the Employer Appeal Request Form or by sending a letter that includes the information requested on the form. The appeal must be filed within 90 days of the date of the Marketplace notice.  Be sure to file the Form (or letter), along with a copy of the Marketplace notice and all reasons you believe the employee should not be eligible for a premium tax subsidy.  This will help later on when you receive not a Marketplace notice but rather an IRS notice of its intent to levy a penalty on the employer.

Be aware that the Marketplace is only interested in information about the employee's qualifications for a premium tax subsidy, and isn't interested at all in the employer's possible penalties.  So why file an appeal with the Marketplace? It provides a first line of defense if or when an iRS notice also appears for that employee.

Lastly, remember that the ACA contains anti-retaliation provisions in Section 1558 prohibiting an employer from taking employment or benefit action against any employee who obtains Marketplace individual coverage and/or a premium tax subsidy.

Posted on September 30, 2016 by Gary B. Kushner, SPHR, CBP, President and CEO

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