Exchange Subsidy Notices: Questions from our Webinar
Our webinar on May 18, 2016 we provided a range of questions from employers struggling with ACA reporting. We’ve divided those questions into topics and have posted responses to the subsidy notification process below. Don’t see an answer for your question? Email us at firstname.lastname@example.org.
Exchange subsidy notices: frequently asked questions
Q: We met the percentage threshold for offering coverage last year, but we did have one employee that qualified for a subsidy. Will we be penalized for that one in 2015 even though enough employees were offered “affordable” insurance based on W-2 income?
A: If you met the 70% threshold for 2015, your organization will not be penalized. However, if an employee received a subsidy via the exchange, the exchange may send you an exchange subsidy notice. If that employee was eligible for benefits and you can prove that your organization offered affordable coverage, you can appeal the penalty. The exchange subsidy notice may come with instructions on how to appeal, or you can use this form.
Q: How does the process work if an employee incorrectly fills out the form and gets a subsidy even though we offered affordable minimum coverage insurance to them?
A: When an employee receives a subsidy via the exchange, you should receive a penalty notice from the exchange. If that employee was eligible for and was offered affordable minimum coverage, you can appeal the penalty. The appeal form and instructions on how to appeal are here. You will need to provide copies of documentation showing determination of eligibility, offer of coverage, the employee’s response to the offer, information on the safe harbor used to determine affordability, and specifics on the coverage offered to show that it meets minimum essential coverage guidelines. Follows the instructions on the form and submit it with the supporting documents. It’s important to reiterate that while you are appealing to the marketplace, the IRS will determine how much, if any, penalty you owe.
Q: Should we appeal a subsidy notice if the individual appears on our 1094-C as being eligible?
A: If an employee was eligible for and was offered affordable minimum coverage, you can appeal the penalty. You will need to provide copies of documentation showing determination of eligibility, offer of coverage, the employee’s response to the offer, information on the safe harbor used to determine affordability, and specifics on the coverage offered to show that it meets minimum essential coverage guidelines. Follow the instructions on the form and submit it with supporting documents. It’s important to reiterate that while you are appealing to the marketplace, the IRS will determine how much, if any, penalty you owe.
However, if an employee appears as eligible, the organization agrees the employee was eligible but that employee was not offered coverage, then the employer has no grounds to appeal and must wait for a penalty notice.
Q: When will exchange enrollment notices arrive to the employer?
A: The exchange subsidy notices should start arriving in June. Employers will not be notified if an employee enrolled—only if the received a subsidy and provided the correct employer address.
Q: Does the two-page appeal response form come with a subsidy notice? If not, where do we find it?
A: The Employer Appeal Request Form may not come with the notice. See the appeal form and instructions.
Q: Why are you recommending that an employer appeal a subsidy notice if an offer is not affordable?
A: We recommend that employers appeal the exchange subsidy notice in order to show how eligibility was determined and that an offer of coverage was made. The IRS may refrain from penalizing your organization for not offering coverage, but they may penalize for not offering affordable coverage. We feel that it is important to be honest to minimize the impact of fines.
Q: On notices from the exchanges, what will the return address be? Knowing this will help me track down notices from multiple locations.
A: We believe that notices will come from the Department of Health and Human Services. However, state exchanges may have a different return address.
Q: Does Tango Health provide the proof needed for an appeal?
A: For Tango clients, the information needed to appeal a subsidy notice is contained in our system of record. We assist clients with gathering the data needed for the appeal, and we walk through the steps of the appeal process and provide support, tracking, and documentation.
Q: If you do not receive a notice from the IRS about a subsidy, does that mean you do not have any employees who qualified?
A: No. This simply means that either none of your employees requested a subsidy, that the exchange did not flag your organization for a penalty, or that the employee did not provide the correct employer address.
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