HHS Begins Sending Exchange Notices

The Department of Health and Human Services (“HHS”) recently began sending notices to employers whose employees claimed eligibility for advance premium tax credits to subsidize 2016 Exchange coverage.

Background. Under the Affordable Care Act (“ACA”), an individual whose estimated household income is between 100% and 400% of the federal poverty line is eligible for advance premium tax credits to subsidize Exchange coverage if:

He/she is not enrolled in employer sponsored coverage; and
The employer has not offered him/her coverage that both (i) is affordable, and (ii) satisfies the minimum value standard.

Notices. HHS recently began sending notices to employers when:

An individual obtained 2016 coverage on a federally-facilitated Exchange;
The individual submitted to the Exchange that he/she qualifies for advance premium tax credits to subsidize the coverage; and
The individual provided the Exchange with the employer’s address.

These notices do not assess employer mandate penalties but are for the purpose of determining whether an individual is eligible for an Exchange subsidy (see below).

Appeals. Employers may appeal these notices to dispute an employee’s entitlement to subsidized Exchange coverage. Employers may designate an agent to help with those appeals.

Distinct from Employer Mandate. The Exchange notice and appeals process operated by HHS:

Only relates to whether or not the Exchange will provide the employee with subsidized coverage; and
Is distinct from any penalties an employer may owe the Internal Revenue Service (“IRS”) under the ACA’s employer mandate.

While this is separate from the IRS’s enforcement of the employer mandate, an employer’s liability for an employer mandate penalty is based on whether a full-time employee receives subsidized Exchange coverage.

Next Steps. It is important to promptly appeal Exchange notices to minimize the chances of a full-time employee receiving a subsidy to which he/she is not entitled because liability for an employer mandate penalty is contingent on a full-time employee receiving subsidized Exchange coverage. We are assisting many companies with these appeals and can serve as the company’s agent to do so.

Contact Information. For more information from Mazursky Constantine, please contact Don Mazursky (404.888.8840), Kelly Meyers (404.888.8838), Angela Roberts (404.888.8822) or Alex Smith (404.888.8839). For more information from VCG Consultants, please contact Leslie Schneider (770.863.3617).