Employers may have received a notice from the Health Insurance Marketplace recently. The notice indicates that an employee has reported to the Marketplace that he or she did not have an offer of affordable, minimum value health coverage form the employer and, therefore, qualifies for advance payment of the premium tax credit (APTC) or cost-sharing reductions (CSRs) in 2016 and has enrolled for coverage in the Marketplace. The notice indicates that an employer can appeal the Marketplace’s decision as to the employee’s eligibility for APTC or CSRs.
If the employer is an applicable large employer (50 or more full-time employees), the employer is potentially subject to an employer-level penalty under Section 4980H of the Internal Revenue Code if it either:
- failed to offer health coverage to substantially all full-time employees; or
- offered coverage that was not affordable or did not provide minimum value
AND at least one full-time employee enrolls for coverage in the Marketplace and qualifies for premium tax subsidies or cost-sharing reductions.
Importantly, the notice from the Marketplace does not necessarily mean that an applicable large employer is liable for a penalty. Only the IRS can assess a penalty under Code Section 4980H.
An employer does not need to appeal the Marketplace’s decision if the statements in the notice are accurate. For example, if the employer did not make an offer of coverage because the employee is a part-time employee and was ineligible for coverage, there is no need to appeal.
However, if an applicable large employer did make an offer of affordable, minimum value health coverage to the employee, the employer should consider appealing. First, such an offer of coverage will mean that the employee is not eligible for APTC and CSRs and an earlier determination by the Marketplace will reduce the employee’s responsibility to repay the IRS for the premium subsidy. Second, the Marketplace’s determination that the employee is ineligible for APTC and CSR may result in no penalty assessment to the employer by the IRS.
Any appeal should be filed within 90 days after the date of the Marketplace notice. The appeal form can be found at: https://www.healthcare.gov/downloads/marketplace-employer-appeal-form.pdf.