Many employers have begun to receive Health Insurance Marketplace notices. The various state Health Insurance Marketplaces are now required to provide employers with a notice when an employee applies for health insurance on the state Marketplace and their application indicates they are eligible for federal subsidies to purchase their insurance.
Being eligible for a subsidy means the employee indicated on their insurance application that their employer did not offer them health insurance or that the insurance offered was not minimum value coverage (i.e., covers 60% of health claims) or was not affordable (i.e., employee portion of the single health premium exceeded 9.66% of the employee’s household income). The only time you need to file an appeal to avoid penalties is if:
You are an Applicable Large Employer with 50 or more full-time equivalent employees (i.e., you need to file Forms 1095-C with the IRS), AND
You offered the employee indicated on the Marketplace notice affordable, minimum value single coverage.
The Marketplace notice seems to suggest that the employee’s eligibility for federal subsidies will, by itself, trigger the Employer Shared Responsibility penalty and that you therefore need to file an appeal to avoid the penalty. That is not the case. An employee receiving subsidized Marketplace insurance is only one of the events required to trigger the Employer Shared Responsibility penalty, and then only if that employee is a full-time employee who you were required to offer coverage to. Any potential Employer Shared Responsibility penalties will result from the coding that was used when you prepared Forms 1095-C for your full-time employees.
The Marketplace notice is issued by Health and Human Services (HHS) and is your opportunity to appeal to HHS that the employee is not eligible for subsidies to pay for the employee’s Marketplace insurance because you offered the employee the required health insurance. If your appeal is successful, HHS will revoke the employee’s subsidies and will not notify IRS that the employee received subsidized Marketplace insurance. If there is no appeal or an unsuccessful appeal, HHS will notify the IRS so the IRS can enforce both the Individual and the Employer Shared Responsibility penalty rules.
We are finding that most clients do not need to file an appeal because the employees with the Marketplace notices are part-time and not benefit eligible. They are therefore eligible for the federal subsidy but also cannot trigger the Employer Shared Responsibility penalty for you. However, we are also finding that employees are not completing the Marketplace insurance applications correctly, such as indicating they were not offered health coverage when they were offered coverage (they forgot) or indicating they are employed by an employer when they haven’t worked there for a number of years. HHS is counting on employers to correct their information to assist in the proper administration of subsidies.
The notice itself has instructions on how to appeal the subsidy. You have 90 days from the date of the Marketplace notice to file the appeal. You can download the employer appeal request form at www.healthcare.gov/marketplace-appeals/employer-appeals and mail the completed form to:
Health Insurance Marketplace
465 Industrial Blvd
London, KY 40750-0061
Or fax the form to 1.877.369.0129.
If you have questions, need assistance with determining whether you should appeal a notice, or need assistance with completing the appeal, please contact our ACA experts Pam Branshaw, Tom Krieg, Bob Buss, or your Wipfli relationship executive.