More Employer Reporting Requirements

Posted: May 24, 2016  

More, More, More Employer reporting requirements– said no one ever!

Just as employers think they can breathe a sigh of relief with form 1094/1095 reporting complete, the employer notice program has been launched that will likely create more administrative work. Spring 2016, the Federally Facilitated Marketplace (FFM) will begin notifying certain employers when employees enroll in Marketplace coverage with advance premium tax credits (APTC); expanding to more employers in later years.

The fact is the Marketplace does not facilitate front end data matching, so there is generally no check to verify if the person is actually your employee or even eligible for coverage. Even if employers have fully complied with play or pay regulations, many employers will still receive a notice putting them at jeopardy to pay penalties. It’s important to watch for these notices in the mail.

Why are you getting this notice?

The employer notice program enacted by the Affordable Care Act (ACA) requires the marketplace to notify any employer whose employee was deemed eligible for APTC and cost sharing reductions (CSR), AND attested that he/she was neither enrolled in employer sponsored coverage nor eligible for employer coverage that is affordable and meets the minimum value standard.

This year employers will get a notice* if:

  1. The employee(s) enrolled during Open Enrollment which ended on January 31, 2016.
  2. And, if the employee received APTC for at least one month in 2016.
  3. And, if the employee provided the Marketplace with a complete employer address.

*For 2016, all notifications will be coming via postal mail, dispersed in batches throughout the year.

Why is this important?

This will provide a basis for the IRS to assess penalties against employers and to help ensure individuals do not mistakenly receive health insurance subsidies. For 2015, The IRS will independently determine any liability for the employer shared responsibility payment without regard to whether the Marketplace issued a notice or the employer engaged in any appeals process.

The IRS will contact employers to inform them of their potential liability and provide them an opportunity to respond before any liability is assessed or notice and demand for payment is made. If it is determined that an employer is liable for an Employer Shared Responsibility payment after the employer has responded to the initial IRS contact, the IRS will send a notice and demand for payment.” (IRS guidance, March 2016)

How to prepare?

An employer has 90 days to submit an employer appeal request form  and assert that it provides its employee access to affordable, minimum value employer sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for APTC.

If the employer is successful, the FFM will send a notice to the employee encouraging the employee to update his or her Marketplace application to reflect that he or she has access to or is enrolled in other coverage. The notice will also explain that failure to update the application may result in a tax liability.

Consult your agent or broker with specific question. Click here for FAQ’s.