How To Prove that You Offered An Employee Group Health Coverage

Lyndsey Barnett 

As open enrollment season rolls along for most calendar year health plans, we know that you have enough to worry about without throwing another form into the mix. However, if you are a large employer (50 or more full-time equivalent employees) and you don’t require employees who waive coverage to sign a formal waiver, maybe it’s worth adding just one more page. Consider the following scenario:  

One of your full-time employees waives coverage, and enrolls in an Exchange plan.  The employee then claims in the Exchange enrollment form that you did not make an offer of coverage in order to receive a premium subsidy. After seeing that you reported this person as one of your full-time employees who received an offer of coverage in your Forms 1095-C – which, by the way, are due by January 31st – the IRS will look to you to see who is telling it straight. The IRS will send you an initial notice informing you that your full-time employee claimed that you did not offer coverage and the employee received a subsidy, and will give you an opportunity to respond to avoid shared responsibility penalties under the ACA, and potentially penalties associated with an inaccurate Form 1095.   

Sending the IRS a copy of the employee’s signed waiver of health coverage should quickly nip this problem in the bud. If you don’t have a signed waiver, you can still show the IRS that the employee received an offer of coverage, but you may need to find more creative ways to rebut the employee’s claim…and by creative, we mean a more time-consuming and document-intensive method that the IRS may still find a reason to question. A signed, one-page waiver may save you a lot of trouble (and potentially money by helping you avoid ACA penalties), so consider adding it to your open enrollment package before it’s too late for 2016.