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CMS Addresses Process for Exchange Eligibility Appeals, Including Decisions Affecting Employers

Marketplace Eligibility Appeals – Options for Paper-based Processes (Mar. 22, 2016)

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CMS has provided guidance on the use of paper-based processes to conduct eligibility appeals relating to certain Exchange-related determinations, including individuals’ eligibility to enroll in a qualified health plan through an Exchange; advance payments of premium tax credits; exemptions from individual responsibility; employers’ potential liability for employer shared responsibility penalties under Code § 4980H; and employers’ and employees’ eligibility for SHOP coverage. Regulations issued in August 2013 (see our article) establish the appeals standards and contemplate use of electronic processes, including submission of Internet-based appeal requests; provision of electronic appeals notices; and secure electronic transfer of eligibility and appeal records among governmental entities involved in deciding appeals. Notwithstanding the regulatory requirements, this guidance allows entities that conduct appeals (typically, the Exchanges themselves) to continue to use paper-based processes for eligibility appeals until December 31, 2016. This flexibility, which extends to all electronic requirements relating to eligibility appeals, had expired in December 31, 2015.

Of particular interest to employers is the appeals process relating to notification from an Exchange that one or more of their employees enrolled in Exchange coverage after being determined eligible to receive a premium tax credit. Although notification from the Exchange does not establish Code § 4980H liability (only the IRS can assess those penalties), it serves as an early indication that an employer may be subject to penalties if it failed to offer affordable, minimum value coverage to full-time employees. Under the appeals regulations, employers receiving a notification may appeal the Exchange’s determination by submitting an appeal request by telephone, mail, or Internet (or in person, if the entity handling the appeal is capable of receiving in-person requests). This guidance allows entities conducting appeals to delay accepting employers’ appeal requests via the Internet until January 1, 2017.

EBIA Comment: The first batch of federal Exchange notices is expected to be sent in spring 2016 (see our article). If an employee is determined eligible for advance payment of premium tax credits, an appeal is an opportunity for the employer to correct any misinformation about employer-sponsored coverage offered to the employee. An employer appeal request form is now available on Employers subject to Code § 4980H should familiarize themselves with the Exchange notification and appeals process since appealing an incorrect eligibility determination can provide an opportunity to “head off” a potential excise tax liability that may be assessed by the IRS at a later date. For more information, see EBIA’s Health Care Reform manual at Sections XXI.B.4 (“Individual Eligibility Determinations”), XXI.D (“Small Business Health Options Program (SHOP)”), and XXVIII.H (“Certification of Premium Tax Credit and Employer’s Payment of Penalties”).

Contributing Editors: EBIA Staff.

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