What Does a Marketplace Notice Mean, and How Are They Reconciled?

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If you receive a Marketplace Notice (also called an Exchange Notice) regarding one or more of your employees, do you know what it means and what to do about it? Marketplace Notices can be a useful early warning system, alerting employers to the possibility that they're running afoul of the Affordable Care Act's (ACA) employer mandate. Receiving a Marketplace Notice doesn't mean your organization owes a penalty, although that's a possibility.

Some organizations may opt to deal with Marketplace Notices in-house, but others will find that an outsourced solution is more efficient. Either way, HR leaders need to have a plan in place for addressing each Marketplace Notice in a timely manner, and an understanding of how the process of receiving and appealing a Markeplace Notice works.

How Are Marketplace Notices Triggered?

A Marketplace Notice is sent to an employer when an individual enrolls in coverage through an exchange, is deemed eligible for a premium subsidy and provides an employer's address on the enrollment application. The Marketplace Notice may end up at an employer's local office rather than the office where HR is based, since the notice is sent to the address the employee provides. Therefore, it's important for HR leaders to ensure that staff members in all locations are aware of the importance of Marketplace Notices and have a plan in place to promptly send all notices to the people designated to handle them.

What Does the Marketplace Notice Mean?

Marketplace Notices simply alert employers that their employees have received a premium subsidy in an exchange. In some cases, this is not a problem for the employer and will not trigger a pay-or-play penalty. Employees who work part-time or seasonally may be eligible for subsidies in an exchange if they aren't eligible for the employer-sponsored plan, and the employer is not on the hook for the play-or-pay penalty. Employers may also use IRS approved safe harbors which shelter them from a pay-or-play penalty, but leave their employers free to receive a premium subsidy. In other cases, the Marketplace Notice will alert HR leaders to a potential problem — either that the organization should've offered affordable, minimum value coverage and failed to do so, or that the organization did offer affordable, minimum value coverage and the employee mistakenly received a premium subsidy in the exchange.

How Should HR Leaders Respond to Marketplace Notices?

Once a Marketplace Notice has been received and sent to the correct person with the organization, the first step is determining whether an appeal is necessary. If the employee had access to the organization's health plan and the plan provided affordable, minimum value coverage, an appeal should be filed. Generally, appeals must be within 90 days. A separate appeal form has to be completed in response to each Marketplace Notice. The appeal form (used by most, but not all exchanges) includes a section in which HR leaders can explain why the employee shouldn't have received a premium subsidy in the exchange. This involves demonstrating that the employee was offered employer-sponsored coverage, and that the coverage was affordable and provided minimum value. Organizations will want to ensure that they have documentation on hand to show the affordability safe harbor they used, that the coverage offered met the minimum value requirements and the time period for which the offer of coverage was made.

What Happens Next?

Once the exchange receives the appeal, they'll send letters to the employer and the employee letting them know that the appeal has been filed. If additional information is needed, the exchange will request it. The employee will be given a chance to submit additional documentation explaining why the exchange subsidy is justified.

The exchange will then make a determination. If they then decide the employee was indeed offered affordable, minimum value coverage, they'll let the employee know they aren't eligible for premium subsidies. The employee will have an opportunity to appeal that decision, in a process outlined by The Centers for Medicare & Medicaid Services. On their next tax return, the employee may have to repay some or all of the premium subsidies paid on their behalf.

If the exchange determines the employee was not offered affordable, minimum value coverage, the employee will be able to keep the exchange subsidy. If the employer mandate applies, the employer may be subject to a play-or-pay penalty, assessed at a later date by the IRS.

Simplifying the Marketplace Notice Reconciliation Process

Organizations that outsource some or all of their ACA compliance may find it more efficient to outsource the Marketplace Notice appeals process, as well. But to accurately respond to Marketplace Notices in-house, HR leaders must maintain data regarding employee hours and coverage offers, affordability safe harbors and proof that the employer-sponsored plan provides minimum value. HR leaders also need a plan in place for answering employee questions about the appeals process, since the exchange will loop the employee into the appeal. Note that the HR staff who handle Marketplace Notices should not be the same individuals who are responsible for disciplining employees in order to avoid any conflict of interest.

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