Benefits Insights

Lyndsey R. Barnett

We have received multiple calls from panicked clients in the past several days due to the clients receiving Health Insurance Marketplace Notices from HHS. If you received one of these notices, please don’t panic quite yet. It does not necessarily mean that your company is subject to a shared responsibility penalty. You received this notice because you have an employee (or at least someone listed you as their employer) who has received financial assistance with their health plan coverage purchased on the exchange. An employer shared responsibility penalty is assessed on a large employer (defined as having 50 or more full-time equivalent employees) who does not offer minimum value, affordable health plan coverage to a full-time employee and that employee goes to the exchange and qualifies for financial assistance. If you are a small employer, you are not subject to the shared responsibility penalties and can ignore the notice.  If you are a large employer who offered minimum value, affordable coverage to the employee(s) listed on the notice or if the employee is enrolled in your health plan (regardless of whether it is minimum value or affordable), you should not be subject to a shared responsibility penalty. Further, if these employee(s) were not offered coverage due to not being full-time, the employee is entitled to financial assistance and no penalty will be issued as a result of this employee qualifying for financial assistance.

So why are you getting this notice now if you  may not be subject to a penalty? HHS is not the governmental agency responsible for issuing shared responsibility penalties.   The penalties are issued by the IRS. However, HHS informs the IRS which individuals are receiving financial assistance on the exchanges. This notice is your opportunity to appeal to HHS that the individual(s) on the notice are not actually eligible for financial assistance. If your appeal is successful, HHS will revoke the individual’s financial assistance and won’t inform the IRS that these individuals may trigger a penalty on their employers. While this will not be your last chance to appeal if a penalty is assessed, appealing the determination now will likely save you time and headaches in the future. For this reason, we recommend that if you receive one of these notices that you take it seriously, do a little homework to determine if this individual was actually offered coverage, and appeal if they were. The notice itself has clear instructions on how to appeal. Also, if you discover that the employee was not offered coverage, but should have been due to their full-time status, now is an opportunity to offer them coverage and avoid continuing to accrue the shared responsibility penalties for the rest of the year.