A few weeks ago, the Center for Consumer Information & Insurance Oversight, an agency of the Centers for Medicare & Medicaid Services (“CMS”), issued guidance regarding the 2016 “Employer Notice Program.” The Employer Notice Program is mandated by the Affordable Care Act (the “ACA”). The law requires that each Marketplace Insurance Exchange (a “Marketplace Exchange”) notify any employer having an employee who was determined by the Marketplace Exchange to be eligible for an advance premium tax credit (“APTC”). This would occur if the employee attested, when applying for coverage under the Marketplace Exchange, that he or she was neither enrolled in employer-sponsored coverage, nor eligible for employer-sponsored coverage that was affordable and met the ACA’s minimum value standard.
Questions and answers regarding the key provisions of the 2016 Employer Notice Program are below.
Q. Which employers will be notified through the employer notice program in 2016?
A notice will be sent to an employer if any of its employees received an APTC for at least one month in 2016, and the employee provided the Marketplace Exchange with a complete employer address. The notice will identify the specific employee, and will include a statement that the employee is enrolled in Marketplace Exchange coverage and has been determined to be eligible for the APTC. For a sample of the 2016 Employer Notice, click here.
Q. Will the notice be sent only to large employers providing group health coverage?
No. The notice will be sent to all employers with one or more employees enrolled in the Marketplace Exchange who are receiving an APTC. Therefore, the notice will be sent:
- without regard to whether the employer is an “applicable large employer” that is potentially subject to penalties under the ACA for not providing qualified coverage;
- without regard to whether the employee at issue is a full-time employee;
- without regard to whether the employer actually provides group health plan coverage to its employees; and
- without regard to whether the group health coverage is insured or self-insured.
Q. To whom will the notice be sent?
The notice will be sent to the mailing address of the employer provided by the employee on his or her application for Marketplace Exchange coverage. As such, the notice for a particular employee will not necessarily be sent to the employer’s corporate office. Rather, if an employer has multiple plants and facilities, and if an employee lists the address of a plant in his or her Marketplace Exchange coverage application, the notice will be sent to that plant.
Therefore, employers need to alert their facilities to be on the lookout for the notices.
Q. When will the notices be sent?
The CMS guidance indicates that the notices will begin being sent in the “Spring.” Since Spring will soon end, we can expect that the notices will arrive soon.
The notices will be sent in batches throughout the year. The first batch will be the largest, covering employees who enrolled in the Marketplace Exchange during the normal 2016 open enrollment period. Subsequent notices will cover employees enrolled mid-year pursuant to the Marketplace Exchange special enrollment rules.
Q. What if an employer disagrees with an employee’s claim that he or she was not offered qualified coverage?
An employer may appeal an employer notice and assert that it either offered the employee qualified (affordable, minimum value) coverage, or that the employee is enrolled in employer coverage. In either case, the employee is ineligible for an APTC. If the Marketplace Exchange agrees with the employer, it will send a notice to the employee encouraging the employee to update his or her Marketplace Exchange application to reflect that he or she has access to or is enrolled in other coverage. The notice will also explain that failure to update the application may result in a tax liability to the employee.
Q. When and how does an employer submit an appeal of an employer notice?
An employer has 90 days from the date of the notice to request an appeal. To access the Employer Appeal Request Form, click here: https://www.healthcare.gov/marketplace-appeals/. The completed form must be either mailed or faxed to the CMS at the indicated address.
Q. Can an employer designate a third party to assist in the appeal?
The Employer Appeal Request Form allows an employer to authorize a “secondary contact” to act on behalf of the employer in regard to an appeal request. However, the form requires the ink signature of an authorized “primary contact” within the employer organization. Therefore, an employer will need to retain some involvement with the appeal process.
Q. Does the Employer Notice Program expose an employer to ACA non-coverage penalties?
No. The CMS Employer Notice Program is separate and distinct from the IRS non-coverage excise tax penalty rules. The HHS regulations expressly hold that an appeal decision made under the Employer Notice Program does not foreclose any rights the employer may have to appeal an assessment of penalties under the Code Section 4980H employer responsibility provisions.
Therefore, an employer is not required to file an appeal under the Employer Notice Program in order to preserve the right to challenge an assessment of a non-coverage penalty tax. However, it may wish to do so to assist in responding to any IRS penalty notice.
* * *
For further information or questions regarding these new Affordable Care Act developments, please contact the Schwabe attorney with whom you work or Wally Miller at 541-686-3299 or wmiller@schwabe.com.
IRS rules of practice require us to inform you that any federal tax advice contained in this correspondence is not intended or written to be used, and cannot be used, by the recipient or any taxpayer for the purpose of avoiding tax penalties under the Internal Revenue Code.
Sign up