Have you received a notice that an employee in your organization has accessed the Exchange for coverage?
Under the Affordable Care Act (ACA), each Exchange is required to send a notice (Section 1411 Certification) to employers regarding any employees who received subsidies to purchase Exchange coverage. These notices will be sent to all employers with employees who received subsidized coverage. This includes employers that are not applicable large employers (ALEs), as well as ALEs that are subject to the ACA’s employer shared responsibility rules.
On June 21st, the marketplace sent out 470,000 notices to employers in regards to specific employees, former employees, COBRA employees, and part-time employees. In brief, the notice states that “X” employee is receiving federal premium subsidies from the marketplace for their individual health insurance premiums and that he or she indicated they are an employee of ABC Company. It goes on to say that, “This person reported that he or she: didn’t have an offer of health coverage from ABC Co., did have an offer but it wasn’t affordable or didn’t provide minimum essential coverage, or was in a waiting period and unable to enroll in health care coverage.” Remember that these were mailed out to employers who are applicable ALEs and some that are not.
So regardless of if your organization is truly impacted by this notice, be aware that these notices may arrive. Receipt of a Section 1411 Certification is not a pay or play penalty assessment against the employer. The IRS will independently determine whether an ALE is liable for any pay or play penalties.
Employers are given the option to appeal and provide proof that, the employee was offered coverage, the coverage was affordable, and met the Minimum Value requirements. Here are some examples of what the employer can provide to confirm the individual was offered a qualified plan.
1. Proof they offered coverage to all FT eligible employees.
2. Proof the coverage meets Minimum Value Requirements
3. Proof of the employees job based income.
4. A document showing the required premium amounts of the lowest cost plan available.
Please remember this notice comes from the marketplace and not the IRS. Meaning that even if you receive a notice it is not a notice of an employer shared responsibility fine, however, the notice states an appeal could reduce your chances of the IRS being notified. This likely means the marketplace and the IRS will be working closely together on compliance requirements. You do have 90 days from the date of the notice to file an appeal.
If you have additional questions, please contact us!