Jul 5, 2016 – Compliance Observer Alert – Appeal of Exchange Subsidy Notices

Compl Obs Header Alert_2016

July 5, 2016

Appeal of Exchange Subsidy Notices

Applies to:  All EMPLOYERS

As previously addressed in our 2nd Quarter Compliance Observer, beginning this spring the Department of Health and Human Services (HHS) announced that it would begin sending Exchange subsidy notices to employers who had an employee(s) enroll in health coverage through the Marketplace and who were deemed eligible for a subsidy at the time of application.  If you are an applicable large employer (ALE), defined as an employer with 50 or more full-time employees, including full-time equivalents, this notice and the determination provided therein, does not establish whether you are liable for an Employer Shared Responsibility penalty, but it may provide a basis for the IRS to assess penalties against you.

For this reason, as well as to help ensure that individuals do not mistakenly receive health insurance subsidies, the ACA gives all employers the right to appeal Exchange eligibility determinations. An appeal will allow an employer to correct any inaccurate information the Exchange may have about the health coverage it offered to an employee who was deemed eligible for a subsidy.

We have been notified by many employers s that they are beginning to receive these notices.  If you receive such a notice, you should file an appeal if you believe the individual’s eligibility for a subsidy was made in error because you offered coverage to the employee that both:

  • Is affordable AND
  • Meets the minimum value standards

If you are an ALE it will be important for you to evaluate each notice individually and determine if the situation described in the notice may leave you open to an Employer Shared Responsibility penalty.  If you find that a notice inaccurately represents the situation (e.g. you offered the full-time employee minimum value, affordable coverage and thus he/she should not be getting a subsidy) then we recommend you appeal to preserve your rights and possibly avoid being assessed an Employer Responsibility penalty in error.  If the notice does accurately depict the situation (e.g. the individual is getting a subsidy because he/she is part-time and does not have to be offered coverage) then an appeal may not be necessary.  Please be advised that filing an appeal is the only way to dispute the information in the letter.

You have 90 days from the date stated on the notice to file an appeal.  The appeal can be filed either by:

  • Filling out the Employer Appeal Request Form
  • Submitting a letter with the following information:
    • Business name
    • Employer ID Number (EIN)
    • Employer’s primary contact name, phone number and address
    • The reason for the appeal
    • A copy of the Marketplace notice (must be included with the letter)

Supporting documentation is not required however we do recommend that you include as much information as possible to support your request.  Although specifics on acceptable documentation have not been provided, we have been able to determine that the following might be helpful when filing an appeal:

  • Proof that all full-time employees were offered coverage
  • Proof that the plan meets Minimal Value standards
  • Proof of income for the individual
  • Documentation that shows the employee contribution and that such contribution is affordable per the ACA standards

For more information on filing an appeal visit: https://www.healthcare.gov/marketplace-appeals/employer-appeals/. Please note that if you are in state with a State-based marketplace, you may be sent a similar notice from your state’s Marketplace rather than CMS. In that case, you should review that notice and any information and websites provided regarding the right to appeal in your state.

Last but not least, be sure you continue to provide the “New Health Insurance Marketplace Coverage Options and Your Health Coverage” to all new hires, as required, within 14 days of their hire date.  More information on this notice can be found HERE.

Please contact your AssuredPartners NL Benefits Team if you have questions or need assistance with this topic or other compliance matters.

Information contained herein is for educational and/or informational purposes only.   The information provided may change over time as the laws and regulations change. This information is not, nor is it intended to be, legal advice and each employer or client should seek their own legal counsel for guidance regarding individual situations.

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