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Compliance Corner: How to Respond to a Health Insurance Marketplace Letter

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Compliance Corner: How to Respond to a Health Insurance Marketplace Letter

Have you received a Health Insurance Marketplace letter from the Department of Health and Human Services (HHS)?  If not, you may be receiving one soon, as HHS recently mailed their first batch of notices to employers.  The purpose of this letter/notice is: 

  1. To inform employers when an employee is receiving a subsidy for health insurance through a federally-facilitated Marketplace (a.k.a. Exchange), and
  2. To provide a process for the employer to appeal the subsidy if the employee should be ineligible to receive it due to the employer’s health plan offer or enrollment. 

It is important for employers to appeal the subsidy, when appropriate, to avoid a potential penalty from the IRS under the Patient Protection and Affordable Care Act (PPACA).  As a reminder, PPACA requires Applicable Large Employers (ALE’s) to offer health coverage to “full-time employees” (as defined under the law) or be penalized if at least one full-time employee receives a subsidy.  The IRS will send a separate notice to employers if a penalty is assessed; details on the IRS’ notification process will be forthcoming.
 
Although the IRS and HHS share information throughout this process, each government entity plays a different role.  The IRS enforces the Employer and Individual Mandates, while HHS administers the Marketplace and subsidy qualification.  And issuance of a Health Insurance Marketplace letter by HHS does not necessarily reflect the IRS’ intent to assess a penalty.  To determine whether you should appeal a Health Insurance Marketplace subsidy letter, please refer to the lists of considerations below.
 
Appeal if Employer is an ALE and Employee Should Not Qualify for a Subsidy Due to:

  • Employer’s offer of health coverage that meets Affordability and Minimum Value standards - refer to health plan’s Summary of Benefits and Coverage (SBC) for Minimum Value status, or
  • Employee’s enrollment in employer’s health plan that meets Minimum Essential Coverage (MEC) standards - refer to health plan’s SBC for MEC status

 No Need to Appeal if:

  • Employee is part-time, unless the letter indicates the employee is full-time
  • Employer is not an ALE -- However, an employer may want to appeal for the purpose of assisting an employee who may have to repay an improperly awarded subsidy.
  • Employer has no reason to believe that the employee is ineligible for a subsidy because
    • Employer did not offer proper health coverage, or
    • Employee received subsidy while in a waiting period
  • Notice addresses a subsidy received by a dependent, instead of the employee, since the employer will not be penalized for a dependent’s subsidy

Appeals Process:

  • Employer must appeal within 90 days of the date of the notice
  • Include the following items with the appeal request
    • Completed appeals form
    • Proof of plan enrollment, offer of coverage, or other documents that support the employee’s ineligibility.  We highly recommend that employers collect and retain employee declinations of coverage.
  • Mail or fax the appeals request as directed on the letter
  • HHS will notify both the employer and employee of its appeals determination
  • Employee has the opportunity to appeal
  • The process can last up to 300 days
  • Appeals instructions and form can be found here
  • The Health Insurance Marketplace letter contains helpful instructions also

Please note that state-run marketplaces may have different notification and appeals processes.  A list of marketplace information by state can be found here.
 
Regardless of whether you appeal the subsidy notice, you should consider talking to the employee if you believe he/she should not qualify for the subsidy.  The employee may have unintentionally (or intentionally) provided incorrect information on the Marketplace application.  An employee who is ineligible for a subsidy should take immediate action to discontinue acceptance of the subsidy to minimize adverse consequences such as repayment of the subsidy received.
 
View a summary for additional information about HHS’ notice and appeals process
Click here to determine if you are an ALE subject to the Employer Mandate and Reporting requirements (generally an employer with at least 50 employees)
 
WHAT THIS MEANS TO EMPLOYERS:  Employers should be prepared to respond to these notices appropriately.  The notices will be sent to the employer at the name and address provided by the employee on his/her Marketplace application.  If you have multiple locations or divisions, be sure to communicate to supervisors to forward any notices they receive, so you can respond in a timely if you choose to appeal.  In addition, have supporting documents readily available to send along with your completed appeals form.