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Employer Notices From The Health Insurance Exchange

July 8, 2016

Beginning in late June, some of your customers, considered an Applicable Large Employer (ALE) according to the Affordable Care Act, may have received a notice from the Federal Health Insurance Marketplace/Exchange. This notice is in regard to employees who applied for and purchased health insurance coverage via the Exchange and who received a tax subsidy to help pay for their coverage. The notice provides your customer with a “first line of defense” against penalties under the Affordable Care Act’s (ACA) employer mandate. If your customer received one of these notices, they should act quickly to determine whether or not an appeal is needed.
Who gets the notice and why?
If, in 2016, one of your customer’s employees went to the Exchange, purchased coverage and received a subsidy your customer may receive a notice. The notices we have seen are addressed to a company’s “Benefits Manager”. Remember, your customer’s employee should not be eligible for a tax subsidy if your customer made an offer of affordable, minimum value coverage. That said, some employees still may have gone to the Exchange, provided incorrect information and received a subsidy.
In those cases, the employee is expected to pay back the subsidy amount, which could reach into the thousands of dollars. These employees may not be as forthcoming as possible and if the determination that resulted in a subsidy being granted in the first place is not corrected, the IRS may issue penalties to your customer for failing to offer coverage.
Don’t let your customer throw the notice away or ignore it
If your customer received a notice for an employee who was offered coverage, appeal immediately. For your customers that made an offer of affordable coverage that meets the definition of minimum value coverage standard, they should immediately appeal the determination to end the possibility of a penalty. If your customer received a notice for a part-time employee who was not offered coverage, it is important to confirm the hours the employee actually worked and provide that as background as to why an offer was not made.
On the other hand, if your customer was required by the ACA to offer coverage, but did not make a qualifying offer of coverage, please let them know that these notices are a first step in the process that could result in your ALE customer being assessed an ACA Employer Responsibility Penalty.
Your customer has 90 days to appeal
The deadline for appealing the benefits determination is 90 days after the date of the notice. If your customer does not do this, they will be required to challenge the process further down the road after the IRS issues a penalty assessment.

Remember, your customer’s employee will have thousand$ of reasons to avoid paying back the subsidy… Your customer should therefore be ready with a comprehensive appeal including any documentation that the employee was offered coverage, any reasons that they were ineligible for coverage, etc.

Questions?  Contact SBAM at (800) 362-5461. 
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