Thousands of employers across the country have received (or soon will receive) a letter from U.S. Department of Health and Human Services (HHS) notifying them that one or more of their employees has applied for healthcare insurance through a federal Health Insurance Marketplace, and that the employee has been deemed eligible to receive a healthcare premium subsidy.
The notice goes on to state:
“…if various conditions are met, you may have to pay an employer shared responsibility payment to the Internal Revenue Service (IRS) in the future.”
In applying for coverage through the Health Care Marketplace, the employed individual must provide the name of their employer and whether or not they have been offered company sponsored health care and if the coverage offered was affordable and met “minimum value” standards.
If you receive a notification letter from HHS, it does NOT automatically mean that you will be required to pay an employer shared responsibility penalty to help offset the cost of your employee’s subsidy. Instead, the letter is part of the process of determining eligibility of the employee to receive the healthcare premium subsidy.
It is important that you take the time to determine if the employee (or employees) named in the notification letter are:
- Actual full-time employees of the company
- Not enrolled in a company sponsored healthcare plan (which would make them ineligible for Health Insurance Marketplace coverage)
- Offered company-sponsored healthcare that you feel meets the “minimum value” standards, but refused coverage (refusing appropriate coverage also makes the employee ineligible for subsidized coverage)
If you feel any of these conditions apply, you can – and should – appeal the HHS finding before the IRS determines that you are an applicable “large employer” that meets the conditions that will require the payment of the shared responsibility penalty. If you are a small company (less than 50 full-time employees) and received an HHS notice letter in error, you should also appeal to correct the mistake, and not just assume it will go away on its own.
The shared responsibility payment was put in place to prevent employers from “dumping” workers into a federal or state health insurance marketplace in order to avoid the cost of offering healthcare coverage. Several states that offer their own health insurance marketplace programs have also sent out similar notices to try and recover the cost of healthcare premium subsidies.
The HHS notification letters are a part of the long term impact that the Affordable Care Act will have on employers across the country, adding reporting and documentation requirements that were not previously necessary.
If you have any questions about your company’s eligibility, the “minimum value” coverage standards, or the process of appealing the shared responsibility payment notice, contact your HR services provider or healthcare coverage provider.
For answers to questions on the tax and accounting implications of the Affordable Care Act, contact Gray, Gray & Gray at (781) 407-0300.