What You Need to Know About Marketplace Subsidy Notices

If your company employs more than 50 people, you may be inundated with marketplace subsidy orders. The U.S .Department of Health and Human Services (HHS) mailed out several hundred thousand of them toward the end of June. (Companies residing in states where the state manages ACA marketplaces may have already received a similar notice in 2015 from their state.) HR professionals want to know, in short order, what they are and what to do with them.

These notices let your organization know that one or more of your employees qualifies for insurance subsidies. This occurs if the individual has indicated that he or she worked for your company and either wasn’t offered healthcare coverage, was offered coverage that wasn’t affordable, or was in a waiting period and unable to enroll in healthcare coverage. The notices themselves offer employers a chance to appeal the subsidy so they won’t be penalized come tax time.

Here is what you need to know about these notices:

  1. If a penalty is likely. While receiving a notice does not immediately indicate that your company will be penalized with hefty tax fees, it does mean that penalties are likely if the information reported is correct. The government will want to be compensated for any subsidy it provides. Therefore, if your employees are working full-time and still qualify for a subsidy, you will be charged a portion of that subsidy.  

 

  • Which employees qualify for subsidies. Employees that qualify for subsidies usually fall into one of four categories:

 

    • Workers who did not receive an offer for health insurance from their employer
    • Workers who find their employer’s healthcare options to be unaffordable
    • Any worker whose work healthcare options don’t provide adequate coverage (or minimum value)
    • New employees in a waiting period and so unable to enroll
  1. When to appeal. The notices are also part of the verification process for applicants trying to receive subsidy. As mentioned above, if the information is accurate and the employee qualifies, you will be fined. However, there are often times when the information is not accurate: For example, if the worker is covered under a qualifying health plan that is proven to be affordable or if the employee is now working part-time. If your company does not employ more than 50 full-time employees, you are not free of potential penalties. Allowing an employee to receive a subsidy will have harsher ramifications.

 

  • When not to appeal. You do not need to respond to notices for part-time employees (unless the notice inaccurately identifies them as full-time employees), employees who were terminated while in a waiting period for coverage, or notices naming spouses or family members as the recipients of subsidy. Again, employees who have not offered affordable coverage to full-time employees will not have a basis to appeal.
  1. How to appeal. All notices are sent via regular mail. Once you receive the notice in the mail, you have 90 days to respond if you wish to appeal. In order to appeal, you will need:
    • Your original subsidy award notice that was mailed to you.
    • A completed Employer Appeal Request Form. If your company resides in a state that runs its own marketplace, you may recognize this form, because more than half use it.
    • Copies of documentation proving you have offered coverage that is both affordable and adequate. Or, documentation proving the employee is not eligible—for example, pay statements proving an employee is part-time.

These documents can be mailed or faxed back to the HHS. Once they are received, a decision will be made in writing. The employer will have the opportunity to file a second appeal in some special cases. After the second appeal, the decision will be final for both the employer and your company. The entire process, including the second appeal process, can take nearly a year.

  1. How to manage. Depending on how large your company is, the intake of these notices can become overwhelming. Be proactive by establishing and communicating processes that can streamline the processes. For example, if your company has satellite locations, you may want to come up with a protocol to handle notices that are sent there. Designating a person to process this paperwork is also an effective way to streamline the process of appealing and record-keeping. Be sure that the person you designate is not in charge of also disciplining employees.

Again, receiving a notice does not mean your company will be fined. This is merely the vetting process for the applicant. If the information is accurate, the IRS will determine if you get fined at a later date. Your job is to report any errors you find and to ensure the information gets sent as soon as possible. By being aware of your role, you will be able to effectively prevent waste and streamline the process.

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