Welcome to the final / sixth post in our series: "ACA Essentials: Does ACA Compliance for Small Businesses Apply to Me?"
If you have 50 or more full-time and full-time equivalent employees (FTEs) (see The Employer Mandate and What it Means for You for details on how to calcualte FTEs [AA1] ) and one of your employees receives subsidized coverage from an insurance Marketplace/Exchange, you may face a complex web of paperwork, regulations and processes driven by Health Care Exchange Notices. So how does this process work?
Receiving Health Care Exchange Notices
When an employee chooses health care coverage from a Marketplace/Exchange and is granted a subsidy, you may receive what is known as Exchance Notice 1411. That document will notify you that the employee has received a subsidy, and if you are an Applicable Large Employer (ALE), you may subject to a penalty from the IRS. If you get such a notice, you can file an appeal if you believe you offered the employee the opportunity to enroll in minimum essential coverage that is affordable and meets minimum value standards (and therefore the employee wasn't eligible for a subsidy). You have 90 days from the date of the Exchange Notice to request an appeal. If you are granted an appeal, both you and the employee will be notified and given specific details about the appeal process. See this infographic for more information on the complex Exchange Notice process. Note: If your state has its own Exchange/Marketplace, the appeal process may be different.
Depending on the outcome of your appeal of the Health Care Exchange Notice (and after the employer submits 1094-C and 1095-Cs to the IRS and the employee files their tax return), you might receive an IRS penalty notice. If you are an ALE and the IRS believes that you haven't met the ACA's requirements for offering health coverage to full-time employees and their dependents (and one or more of your employees received a subsidy), you will receive a separate notice from the IRS to inform you of a potential penalty. These IRS notices are expected to start later in 2016 for employers with 100 or more full-time and FTE employees (employers with 50 to 99 full-time and FTE employees may face these notices/penalties next year if they don't meet the requirements in 2016). If you receive this notice and do not agree with the IRS determination, you may also appeal, but the IRS hasn't released details on the process.
Information Required for Appealing
During these appeals, you will likely have the opportunity to submit documentation showing:
- Eligibilty, enrollment and contribution information regarding your health plan;
- That you offered the employee coverage, and the coverage was affordable and provided minimum value;
- That the employee waived coverage when offered an effective opportunity to enroll in your plan; or
- A safe harbor applied so no penalty should be assessed.
Make sure you maintain accurate records in case you need to support an appeal of potential penalties.
Read the rest of the series:
Visit and subscribe to ADP's "Eye on Washington" for the latest on Health Care Reform and other regulations impacting employers: https://www.adp.com/tools-and-resources/adp-research-institute/research-topics/legislative-updates.aspx
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