Is the ACA in Your Mailbox? Reading Between the Lines on Marketplace Subsidy Notices
By: Tim Gulbranson
As the multi-year phase-in of the Affordable Care Act (ACA) continues, requirements for employers, employees, and government agencies continue to be rolled-out and enforced. The newest mandate of the law, the Employer Notice Program for Federally Facilitated Marketplaces (which includes both Iowa and Illinois), was implemented by the Centers for Medicare & Medicaid Services (CMS) in July 2016. In short, the ACA requires each state’s Marketplace Insurance Exchange (the “Marketplace”)—whether state- or federal-run—to notify all employers that have at least one employee who is receiving an advanced premium tax credit (APTC) (i.e., health insurance subsidy) under the ACA.
These notices, also known as Health Insurance Marketplace Subsidy Notices or 1411 Certification Notices, are meant to put employers on notice that the employer may be required to pay an employer shared responsibility payment (i.e., a penalty) if the IRS determines the employer is an applicable large employer (ALE) that did not offer the employee affordable insurance for the minimum required amount of coverage. The notices are sent to all employers with employees receiving an APTC, regardless of whether the employer was required to offer health insurance to the employee and regardless of whether a penalty will actually be assessed.
Further, the notices include the employee’s name, DOB, SSN, and Marketplace ID number, but do not provide the specific reason the employee applied for the APTC. Needless to say, as an employer, receiving a notice can be unnerving, but there are a few simple rules of thumb that will help put your mind at ease about whether you may be assessed a penalty by the IRS come tax season.
First, as mentioned previously, the shared responsibility payment is only applicable to ALEs, which generally includes employers with at least 50 full-time employees. Next, if the employee who is the subject of the notice was not full-time during the period the notice covers, the employer would not be required under the ACA to offer coverage to the employee and a penalty will not apply. Under these scenarios, it is likely not required to appeal the Notice, because your company should not owe a penalty.
Finally, if your company receives a Notice, the company is an ALE, and the individual identified in the Notice is a full-time employee to whom minimum, affordable health insurance was offered, the penalty may not apply. In this case, filing an appeal to the Marketplace—which must be done within 90 days of receiving the Notice—is a proactive way to deny a penalty is owed before the IRS is notified of the potential penalty and starts to investigate. A copy of the appeal form can be found here.
Employers should also handle and process the Notices very carefully. What many may not know is that the ACA passage included anti-discrimination amendments to the Fair Labor Standards Act (FLSA). These amendments provide an employee the ability to sue his or her employer if the employee have a reasonable belief an adverse employment action (e.g., termination, discipline, etc.) was made because he or she applied for health care insurance in the Marketplace. Therefore, the Notices should be kept separate from Human Resources departments or other employees that make employment or disciplinary decisions. Additionally, company policies and procedures that track the Notice and appeal timeline should be adopted to ensure compliance with the law.
Of course, as with all federal laws, the devil can often be in the details and the ACA contains many legal nuances (i.e., What is “affordable”?; What is “minimum coverage”?; How is full- vs. part-time calculated?; etc.). You should always consult with your attorney before determining on your own whether the notice, or potential penalty, applies to you and your business.
However, while the guidelines above are good to consider generally, there are a few steps you can take as an employer to ensure compliance with the law, regardless of your situation, including:
- Drafting a company policy with a purpose of adhering to the ACA’s provisions and addressing Marketplace and IRS notices, regardless of the eventual applicability to your business;
- Creating procedures for how the notices will be handled within the company to ensure the notice is handled appropriately and timely;
- Developing anti-retaliation policies and procedures (or incorporating ACA anti-retaliation considerations into existing policies) to ensure the notices do not lead to the employee being disciplined or terminated, or him or her perceiving it.
This post is just a primer on Marketplace Subsidy Notices; for specific questions on your organization’s notices, feel free to contact us.
Tim helps clients with estate planning, commercial real estate, and employment law matters.