Employers Begin to Receive ACA Notices
Employers with 50 or more full-time employees (or equivalents) can incur a penalty from the IRS if they fail to offer health insurance coverage to their full-time employees and their dependents that meet certain standards under the Affordable Care Act (“ACA”). The ACA requires the marketplaces (where individuals purchase insurance and receive tax credits) to send notices to employers if an employee received an advance payment of a tax credit after purchasing insurance from a marketplace. The notice serves as an initial declaration that there may be a problem with the employer’s offer of health insurance to that particular employee. The notices explain that the employer may be subject to a shared responsibility payment for failing to offer affordable coverage that meets the minimum value standards required under the ACA. A sample notice is attached.
The marketplaces do not levy penalties against the employer. Only the IRS can do that. Stated another way, receipt of a notice does not mean the IRS has or will assess a penalty and failure to appeal the notice does not prevent an employer from later appealing an IRS penalty.
Employers should carefully note the deadline to appeal provided in the notice. Most marketplaces utilize the standard appeal form with a 90-day deadline to appeal from the date of the notice. Information on filing an appeal can be found at this link. The marketplace appeal process is the employer’s first opportunity to dispute a claim that could potentially lead to an IRS penalty. The appeal process allows the employer to provide documentation substantiating that the employee at issue was not entitled to an offer of coverage due to his or her employment status or declined coverage that was offered.
Documentation is absolutely key for employers to respond to these notices and prove they are complying with the ACA. If you receive a notice, review your ACA-related policies and procedures and consult with your ACA team. Gather the information necessary to appeal the notice. This is a good time to determine whether there are problems with your ACA implementation or documentation.
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