Health care marketplace exchange education, while important, is an area where many organizations are lacking. With all the attention given to the state exchanges that have been established, many employers are wondering what, if any, obligations they have toward their employees with respect to those Marketplace Exchanges and how to deal with an employee who qualifies for a subsidy on an exchange/marketplace plan.
By placing an emphasis on health care marketplace education, organizations can save real money and keep their employees happy.
What to Tell Your Employees
According to the Department of Labor, virtually all employers were required to give notice to their employees, by October 1, 2013, of the following three things:
- That a Health Insurance Marketplace has been established on which they can shop for insurance.
- That if an employee purchases insurance on the Marketplace, they might be entitled to receive a subsidy toward their premium payments.
- That if they do purchase their coverage on a Marketplace, they may lose whatever contribution their employer would typically make to their health coverage premium.
For employees hired after October 1, 2013 the requierment is to provide the notice iwthin 14 days of an employee's start date. While sending the notice is a requirement, there is no penalty assessed against any employer that failed to do so.
Managing Exchange Notices
The crucial way in which the exchanges/marketplaces can impact an employer is if the employer receives an exchange notice for one of their employees. Note that those notices differ from the exchange notices employers are required to hand out to all employees. The receipt of an exchange notice means that at least one of your organization's employees qualified for a subsidy when purchasing health insurance coverage on an exchange/marketplace.
That should really only happen for one of two reasons: The employee in question was not offered coverage at all; the employee in question was offered coverage but the coverage was either not affordable (i.e. it cost the employee more than 9.5 percent of household income) or the coverage did not provide minimum value (i.e. the coverage offered would not cover, on average, at least 60 percent of the employee's estimated health care expenses, also known as a "Bronze Plan").
The primary importance of receiving an exchange notice is that alerts the employer to a potential penalty. Assuming the employer has offered coverage to at least 95 percent of its full-time employees, it can expect to pay a penalty equal to $3,120 multiplied by the number of full-time employees who received a subsidy for 2015.
One possible cause of the notice is that the employee made an error in filling out the exchange paperwork. In the event an employer believes the organization has received an exchange notice in error (i.e. the employee in question was offered coverage that was affordable and provided minimum value), the employer has the right to appeal. Employers have 90 days from the date stated on the notice from the marketplace to file an appeal.
The appeal can be filed in one of two ways:
- Fill out the Employer Appeal Request Form and mail or fax it to the Department of Health and Human Services (HHS).
- Submit a letter to the HHS with the following information: Business name, Employer ID Number (EIN), Employer's primary contact name, phone number and address, the reason for the appeal and information from the marketplace notice received, including date and employee information.
While the idea of recouping any potential losses from penalties will likely be attractive to most employers, it is important to realize the impact such an appeal can have on the employees in question. A successful appeal by the employer can result in the employee being required to pay back the subsidy they received that they were not truly eligible for. That can obviously have negative consequences for the organization's employee relations.
However, it is also possible for the appeal to result in unintended consequences on the organizations's bottom line. If, for example, an employee who was denied a subsidy elects to accept the employer's coverage in the following year, that could end up costing the organization more than simply paying the fine.
Deciding how to proceed once you've received an exchange notice will never be a cut-and-dry choice. You will have to assess on a case-by-case basis what the potential costs in both dollars and employee morale will be and then make the best decision for your organization as a whole. But you can go a long way toward avoiding this situation altogether if you ensure that your employees are knowledgeable about their options and which will be the best for their particular situation.
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