Managing ACA Subsidy and Appeals

Just as employers wrap up their 2015 Form 1094-C/1095-C reporting obligations, many are facing the next ACA hurdle—Marketplace subsidy notifications and appeals. The first wave of subsidy notifications were mailed to employers in late June, and we can expect more to come. Many employers in states supported by the Federal Exchange should expect to receive one or more notices. Generally, the notices are addressed to a company’s “Benefits Manager.” It is critical to speak with your mailroom or mail sorter to make sure the notices get to the correct person to administrate an appeal properly and timely, especially if your organization has numerous locations.

Premium subsidies (sometimes referred to as advanced premium tax credits) are available to individuals who purchase health insurance through the public health insurance Marketplace and who are determined to meet certain eligibility criteria. Marketplaces are required to notify employers when an employee enrolls in Marketplace coverage and is determined to be eligible for a subsidy for any month in 2016. The CMS FAQs say the notices will be mailed in batches to employers whose employees have received premium subsidies if the employee provided “a complete employer address.” Going forward, the federally run exchanges may opt to send the notice employee by employee within a reasonable time after a premium subsidy determination. Because subsidies are the trigger for penalties under the ACA’s employer shared responsibility provision (the so-called “employer mandate”), it is important that employers understand what the notices mean and how to respond. Employers that receive a notice from the Marketplace stating they may be subject to penalties under the employer mandate can file an appeal within 90 days from receipt of the notice if they believe either that they offered coverage to an employee that is both affordable and meets minimum value standards or that they were not required to make an offer of coverage to the individual. Importantly, these notices do not mean that an employer is actually being assessed a penalty under the employer mandate; it simply means that an individual in the Marketplace has been deemed eligible for a subsidy which could subject the employer to penalties in the future should it be determined that the individual should have been offered affordable, minimum value coverage by the employer. It is important to note that an employer does not have to file an appeal at this stage in order to preserve its right to appeal an IRS penalty determination that may occur in the future.

Because subsidies are the trigger for penalties under the ACA’s employer shared responsibility provision (the so-called “employer mandate”), it is important that employers understand what the notices mean and how to respond. Employers that receive a notice from the Marketplace stating they may be subject to penalties under the employer mandate can file an appeal within 90 days from receipt of the notice if they believe either that they offered coverage to an employee that is both affordable and meets minimum value standards or that they were not required to make an offer of coverage to the individual. Importantly, these notices do not mean that an employer is actually being assessed a penalty under the employer mandate; it simply means that an individual in the Marketplace has been deemed eligible for a subsidy which could subject the employer to penalties in the future should it be determined that the individual should have been offered affordable, minimum value coverage by the employer. It is important to note that an employer does not have to file an appeal at this stage in order to preserve its right to appeal an IRS penalty determination that may occur in the future.

An employer can file the appeal one of two ways: fill out the Employer Appeal Request Form provided on Healthcare.gov or submit a letter with the following information: business name, employer ID Number (EIN), Employer’s primary contact name, phone number and address, the reason for the appeal, and information from the marketplace notice received, including date and employee information. As it currently stands, the information provided on Healthcare.gov and the actual notices received by employers in the mail have different filing options, as Healthcare.gov does not provide a fax number to send in the appeal. As a best practice, it is recommended to follow the information contained in the notice itself, which requires employers to respond utilizing the Employer Appeal Request Form and either mail the completed form to: Health Insurance Marketplace, 465 Industrial Boulevard, London, KY 40750-0061 or fax the form to 1-877-369-0129. Employers who are attaching documentation to the Employer Appeal Request Form to support their appeal should include copies (not originals) of those documents when the appeal is filed.

Once an appeal is filed, the employer will receive a letter acknowledging receipt of the appeal. Further information on how to proceed through the appeals process will also be included in this letter, including instructions for submitting additional materials if needed. Another discrepancy between the Healthcare.gov website information and the actual notices is what number an employer can call to get more information on filing an appeal. The notices provide a number to the IRS at 1-800-829-4933, whereas Healthcare.gov informs employers to contact the ACA Employer Call Line at 1-800-355-5856 for general questions or if an employer has questions about an appeal they should contact the Marketplace Appeals Center at 1-855-231-1751.

There are two intended benefits to these notices…one for the employee and one for the employer. For the employee, with the rollout of the Marketplace, many employees were either confused or provided incorrect information about the availability of employer coverage, thus resulting in a tax subsidy to which they are not entitled. Once the final coverage information is analyzed after the 1094/1095 forms are submitted to the IRS, if an employee is deemed to have incorrectly been awarded a subsidy during the prior year they will need to pay back these amounts, which in many cases could be thousands of dollars. This notice allows an employee to rectify this error in “real time” and avoid what could be a financially devastating tax surprise should the subsidy be deemed improper after an entire year has passed. For the employer, these notices provide an opportunity for early intervention in the penalty process to rectify incorrect subsidy determinations before the information goes to the IRS and actual penalties are levied against the employer.

It is also important for employers to carefully consider how to proceed in light of the ACA retaliation rules, which say that a company 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.” One approach is for employers to put a process in place to put outside counsel or other persons who are not responsible for employee discipline in charge of the notification letters and related appeals in order to help avoid or defeat a later adverse action claim. If an employer can show that the person who made a termination or disciplinary decision did not have knowledge that the employee had received a credit under the ACA or reported any violation of the ACA, that will help the company prove that it would have taken the same adverse action in the absence of the employee’s protected activity.

Helpful links:
Healthcare.gov Appeals Information
Employer Appeal Request Form

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The materials and information contained in this email represent the opinions of Alltrust Insurance, Inc. and are for informational purposes only, not for the purpose of providing legal advice. The opinions expressed in this communication are made based on currently available information and are subject to change at any time. For advice about a specific legal question or situation in your organization, Alltrust Insurance, Inc. recommends you contact legal counsel of your choice.

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