If your business has employees, there is a chance you may receive a notice in the mail from the Health Insurance Marketplace. This notice will let you know that you have an employee who submitted an application for health coverage through the ACA Marketplace and they have been determined to be eligible for a premium tax credit.
First: Don’t retaliate
Before we discuss what you need to do, it’s worth knowing that the Affordable Care Act (ACA) contains a non-retaliation provision. So if you receive a notice regarding one of your employees, it is very important to not take any retaliatory action towards that employee.
What does the notice mean for you?
If the employee receives a tax credit and you did not offer the employee affordable health care coverage, your company could be on the hook to pay the Employer Shared Responsibility Penalty to the IRS. If you are unfamiliar with these penalties, you can review this IRS Site for more information. Sample notice:
What if you did offer the employee coverage?
If you offered the employee coverage, this is your opportunity to appeal the notice. Here are some helpful hints when submitting an appeal:
- Download the Employer Appeal Request Form.
- The Marketplace will review appeals based on the following issues:
a. Whether or not the employee was offered health coverage that met the “minimum value standard”
b. Whether or not the health coverage you offered to the employee was “affordable”
c. Whether or not the employee chose to enroll in that health coverage
- To complete the appeal, fill out all of the necessary information, provide an explanation of your appeal, and then include supporting documents.
- Here is an outline of the documents you could use:
What if the employee was not offered coverage because he/she is not a full-time employee?
The Marketplace does not review eligibility based on employment status, but instead defers to the IRS to determine if an employer is subject to the Employer Shared Responsibility Penalty. This information will be reported to the IRS through your 1095-C reports; however, it is still important to make sure you have documentation to support your reason for not offering benefits.
If I win my appeal, does that mean my company will not receive a penalty from the IRS?
The Marketplace cannot determine if an employer owes a Shared Responsibility Penalty, as that determination is made by the IRS. With that being said, if a Marketplace appeal is decided in the employee’s favor, this could prevent the Marketplace from reporting to the IRS that an employer received a credit, or could reduce the period for which the employee was reported as receiving a credit. This process is still so new that we are waiting to learn more about how the IRS will assess and distribute penalties and if there will be an appeal process for employers to utilize.
If you are a current StratEx client, and have questions or need assistance with an appeal, you can always reach out to your HR Account Manager. If you are not a current client, contact us for more information on how we can help you work through questions around the ACA, Payroll, Benefits, and HR.