Roger Prince
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Bill Enck, CPA

ACA Marketplace Employer Notices are Coming: Even if You’ve Complied with the Law


Employee confusion or misrepresentation about coverage options can have unintended consequences for employers, putting them at risk for penalties.

Employers subject to the Affordable Care Act “pay or play” rules may already have received (or will soon) employee subsidy notifications. Federally Facilitated Marketplaces, (including Maine and New Hampshire) and some state marketplaces (including Massachusetts, New York, and Vermont) have started to issue 2016 marketplace notices to employers informing them that one or more of their employees has purchased health insurance from the marketplace AND qualified for a federal subsidy (aka advance premium tax credit). This means that the employer may be assessed an Employer Shared Responsibility Payment – i.e., a “pay or play” penalty for 2016.

Why would this happen?

Only employees not offered employer health coverage considered affordable (e.g., meets one of the three safe-harbors) and meets minimum value are eligible for federal subsidy or cost-sharing. Because some employees may be confused by the rules, they may have indicated to the marketplace that they were not offered adequate employer coverage when, in fact, they were. Once an eligible employee receives a subsidy, the employer will receive a notification, regardless of whether the employee is actually eligible for a subsidy or not.

Act Quickly: Only 90 Days to Appeal

Notices are being sent to each employer’s “benefits manager” at the address supplied by the employee. If your company has multiple locations, make sure each office is aware of and on the lookout for these notices and the process for forwarding the notice to the correct person. As an employer, you have only 90 days from the date of the notice to appeal, so make sure a process for identifying and addressing each notice is in place at your organization—one that allows plenty of time to appeal the penalty.

If you need to appeal

The Department of Labor has provided an Employer Appeal Request Form online. There are a number of supporting documents required for the subsidy appeal. In almost all cases, you will want to submit an appeal if the marketplace has the wrong facts. Fortunately, the form allows any affected employer to designate a secondary contact to help them navigate the process. Do not go it alone!

Our ACA experts can serve as your secondary contact and help you prepare an effective appeal. The ACA employer penalties are tax penalties—let tax specialists work with you on this.

If you fail to appeal a marketplace notice, the next time you hear from a government agency with respect to the affected employees, will be in the summer or fall of 2017, when penalties are assessed for the 2016 calendar year. Although there is a process to appeal that penalty assessment as well, we recommend against waiting for the IRS penalty to be assessed before you appeal.

You may hear from the IRS in the fall of this year indicating that a “pay or play” penalty is due for the 2015 calendar year. That determination may also be appealed and you should definitely enlist the assistance of a tax professional that understands the ACA “pay or play” provisions.

We are committed to helping our clients work through this process and other ACA compliance issues that might arise. Please contact Bill Enck or Roger Prince directly if you have questions or need help.