ACA Marketplace Notice Fundamentals

Featured Image for ACA Marketplace Notice Fundamentals

Marketplace notices are how employers are alerted to the fact that their employees are receiving subsidies in a public exchange. So why should an employer care if their employee gets a subsidy? The ACA's employer shared responsibility penalty applies to applicable large employers (ALEs) who don't offer health insurance to their full-time employees and their dependents or offer health insurance that is not affordable and/or does not provide minimum value. In either case, the penalty is triggered if one of their full-time employees obtains a subsidy from a public exchange.

Premium subsidy eligibility in the exchange (marketplace) is based on income. But in addition, subsidies are only available to people who state that they don't have access to affordable, minimum value health insurance from an employer.

As part of the process for determining whether enrollees are eligible for a subsidy, exchange applications ask enrollees for their employer's name and address and for details about any health coverage that the employer might offer. When enrollees who qualify for a subsidy through the public exchange provide employer contact information, marketplace notices are generated by the public exchange and mailed to employers.

Marketplace notices are also referred to as Section 1411 Certifications, and they generally adhere to the format outlined by the Centers for Medicare and Medicaid Services. They're an informational tool for employers, and while they can be a precursor to a penalty assessment from the IRS, the marketplace notices themselves don't indicate whether your organization will be subject to a penalty.

Who Receives Marketplace Notices?

Currently, you'll only receive marketplace notices if you have employees who obtain subsidies in the public exchange and if those employees provide the exchange with your organization's address, according to the Centers for Medicare and Medicaid Services. If you have multiple locations, you'll want to alert office staff at each location to be on the lookout for the notices because employees might provide the public exchange with their local address for your organization, rather than your headquarters.

Marketplace notices are mailed out to ALEs relatively soon after their employees enroll in subsidized coverage through the public exchange. But penalty assessments from the IRS aren't sent out until after the employee's tax return is filed the following year. So the notices from the marketplace can serve as an warning that a penalty assessment might be coming. An appeals process gives employers an opportunity to respond and address any errors before penalties are calculated, potentially heading off a penalty assessment from the IRS.

According to the IRS, the employer shared responsibility penalty can be prorated on a monthly basis, so if you receive accurate marketplace notices for full-time employees, you could begin offering affordable minimum value coverage and limit your exposure to the penalty going forward.

Appealing Marketplace Notices

If you receive marketplace notices and believe that your employees were incorrectly awarded a subsidy (i.e., you offered coverage to the employees in question and provided a minimum-value, affordable option), you have 90 days to file an appeal. If the notices come from the federal exchange or a state-run exchange in California, Colorado, Washington DC, Kentucky, Maryland, Massachusetts, New York or Vermont, you'll use Healthcare.gov's appeals process. The state-run exchanges in Connecticut and Washington have their own appeals process. Appeals must be done on paper for 2016, but online options may be available in future years.

Keeping meticulous records of employment and coverage information will make it easier to verify whether the information in the marketplace notices is correct and to appeal if it's not. If you appeal a marketplace notice, the public exchange will notify you — and the employee — that the appeal has been received. If your appeal results in your employee losing access to the exchange subsidy, the exchange will correct the erroneous subsidy-eligibility determination. You'll want to be prepared to answer questions that your employee might have. Your employee will also have a chance to appeal the new determination.

You might receive marketplace notices based on subsidized exchange enrollment of your part-time, seasonal and variable-hour employees, as well. In that case, you don't need to appeal. Instead, you'll appeal to the IRS if you end up being mistakenly assessed a penalty for not offering coverage to employees who aren't full-time.

Marketplace notices don't mean that a penalty is due, but it's still essential to have a plan in place for dealing with them. While you're not actually required to respond, there is a limited window to appeal so it's important to have a documented process and action plan to act on these early warning signs. To find out more, see the infographic, Top 3 Things You Need to Know About Exchange Notices.