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Federal Exchange Notices to Employers Set to Start in 2016

Frequently Asked Questions Regarding The Federally-Facilitated Marketplace’s (FFM) 2016 Employer Notice Program (Sept. 18, 2015)

Available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Employer-Notice-FAQ-9-18-15.pdf

Visit the Health Care Reform Community on Checkpoint to join the discussion on this development (for Checkpoint subscribers to EBIA’s Health Care Reform manual).

CMS has issued FAQ guidance providing that, beginning in 2016, all Exchanges operating on Healthcare.gov (including federally facilitated Exchanges and state-based Exchanges using the federal platform) will start to notify certain employers if one or more of their employees has received an advance payment of premium tax credits. As background, Exchanges are required to send notices to employers identifying employees determined to be eligible to receive advance payment of premium tax credits. (See our article.) A full-time employee actually receiving premium tax credits can trigger penalties under Code § 4980H for his or her employer unless the employer has offered adequate coverage to its full-time employees (and dependents).

These Exchanges will phase in the employer notice program by first sending notices to employers with employees who received advanced payment of premium tax credits for at least one month in 2016 and for whom the employee provided a complete employer mailing address. CMS intends to evaluate the program phase-in for 2016 and then determine the best means of expanding and improving the process in subsequent years. (State-based Exchanges not on the federal platform also have the option to phase in the notice process.) The FAQs explain that the first batch of notices will be sent in spring 2016, and additional batches will be sent throughout the year. For 2016, the notices will be sent to the mailing address of the employer provided by the employee on his or her application for Exchange coverage, but CMS is considering alternatives (such as email notifications) for the future. An employer has 90 days from the date of the notice to appeal. The FAQs note that an employer appeal request form will be available on Healthcare.gov.

EBIA Comment: Employers should look for the first batch of notices from Exchanges operating on HealthCare.gov following the close of the upcoming open enrollment period at the end of January 2016. Even though these Exchanges apparently have not been providing notices for 2015, employer penalties (first applicable in 2015) can still be triggered with the IRS independently determining any liability without regard to whether an Exchange issued a notice or whether the employer appealed such a notice. CMS notes that it has emphasized the importance of using the Employer Coverage Tool, which allows applicants to provide information to the Exchange about the coverage available under an employer’s plan (see our article). Employers should consider making employer plan information readily available to their employees so that accurate premium tax credit eligibility determinations may be made by the Exchanges. In addition, employers should develop a process for handling Exchange notifications, including appealing any incorrect determinations. A successful appeal by the employer could head off potential employer penalties. For more information, see EBIA’s Health Care Reform manual at Sections XXI.B.4 (“Individual Eligibility Determinations”) and XXVIII.G (“Certification of Premium Tax Credit and Employer’s Payment of Penalties”).

Contributing Editors: EBIA Staff.

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