By now many employers have received notices from CMS stating that they are subject to a penalty under the Employer Mandate (for groups over 50) created by the ACA. If you are one of them, you may be wondering why you’re getting these and what your next steps are.
Remember that The Centers for Medicare and Medicaid Services (CMS) and the IRS are using your 1094 and 1095 forms submitted earlier this year to verify individual subsidy eligibility, and to enforce the Individual and Employer Mandates.
There are 2 fines employers could be subject to:
- $2,000 per FTE (excluding the first 30), assessed to employers who fail to offer affordable coverage to 70% of their FTEs (95% for years 2016 and later), and at least one FTE qualified for a subsidy
- $3,000 per FTE that actually receives a subsidy, assessed to employers who fail to offer affordable coverage to those FTEs that qualify for a subsidy
Notices are being sent to employers only when an employee is determined eligible for a subsidy and actually enrolls in Individual Marketplace coverage. If you get one, and you disagree with the penalty, what should you do? For example, an employee stated on their subsidy application that they were not offered minimum essential affordable coverage through the employer, and therefore received a subsidy. However, you have documentation proving they were in fact offered coverage and declined to enroll. An employer would want to appeal this penalty, because they in fact did comply with the mandate.
There is a 2-step appeals process:
- Stage 1: Employer appeals to Federal or State Exchange, by filling out paper appeals form
- The decision is final for employers, can only be appealed by the employee further
- Stage 2: Employee appeals to HHS directly
- The decision is final for both employers and employees
The appeal deadline for employers to appeal is 90 days, and you only have this one chance! Appeals need to be filed in the state where the employee lives. The appeal form for Colorado can be found here.
Below are some best practices to follow when handling subsidy notifications and appeals:
- Document EVERYTHING! Keep meticulous records including an employee’s initial hire date, when they were offered coverage, and especially if they declined coverage. Document and calculate your FTEs consistently.
- Meet your ACA compliance rules and deadlines, and meet your appeal deadlines if applicable.
- Engage your employees and communicate to them!
- Let employees know if you will be appealing an employer penalty involving them. Have a basic conversation with the employee, explaining that they might not be eligible for the subsidy they claimed, since according to your documentation they were offered minimum essential affordable coverage.
- Ask them if they disagree and try to get to the bottom of where the confusion lies. They may have a different idea of what “affordable” means, but remind them that there is a calculation specified by law for that definition.
- Let them know that they may have to pay that subsidy back if the employer wins the appeal.
Following these tips could help employers reduce their penalties. Please This email address is being protected from spambots. You need JavaScript enabled to view it. a member of the Fall River Team if you have additional questions.
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Healthcare Legislation
Tonya Young
Tonya is our Senior Account Manager and brings eleven years of prior insurance company expertise to Fall River, having worked at Anthem Blue Cross and Great-West Healthcare (now part of CIGNA). Tonya holds a Bachelor of Science in Psychology from Texas A&M University. Originally from Minnesota, she loves the Colorado outdoors and enjoys family time with her young daughter.