Many employers have begun receiving Health Insurance Marketplace notices – letters stating that a particular employee reported that he or she wasn’t offered affordable minimum value coverage for one or more months during 2016.  The letter states that the employee has been determined to be eligible for subsidized Marketplace coverage.  This means, if the employer is an “applicable large employer” for purposes of the Affordable Care Act’s employer shared responsibility penalties, the employer may be subject to penalties with respect to that employee.

An employer may appeal the decision that the employee is eligible for subsidized Marketplace coverage if the employee was offered affordable minimum value coverage or is enrolled in group health coverage. The employer has only 90 days from the date of the notice to appeal the Marketplace notice and may do so by using the appeal form available from the HealthCare.gov website (which may be mailed or faxed to the Marketplace appeals unit) or by sending a letter with the information specified in the notice.  Faxing the appeal (to the fax number provided in the letter) may result in a faster response regarding the employer’s appeal according to an appeals unit representative.

If the employer’s appeal is decided in the employer’s favor, this could eliminate reports to the Internal Revenue Service (“IRS”) that the employee received subsidized Marketplace coverage (thus, potentially avoiding receipt by the employer of an IRS penalty notice with respect to that employee).  However, the Marketplace notices issued so far only relate to the first part of 2016.  An employer’s successful appeal of a determination made about an employee’s eligibility for subsidized Marketplace coverage during the first part of the year would not insulate the employer from penalty vulnerability for the whole year.

Employers deciding to appeal the Marketplace determinations should bear in mind that an employee’s status as part-time or the fact that an employee is in a measurement period (or any other fact besides being covered or offered affordable minimum value coverage) is irrelevant to the Marketplace’s determination. Therefore, such facts are not the basis for appealing a Marketplace determination.  Instead, those facts would be the basis for appealing an IRS determination that an applicable large employer owes shared responsibility penalties and such employers are well-advised to make sure they have the documentation necessary to provide evidence of those facts regardless of whether they decide to appeal.

Employers also are reminded that discriminating against an employee because he or she received subsidized Marketplace coverage is prohibited. To help avoid and defend against potential claims of such discrimination, employers should take appropriate steps to ensure that individuals making employment decisions are not made aware of Marketplace determinations about employees (see our prior blog post regarding related considerations).

We also caution employers who decide to appeal Marketplace determinations to be circumspect in their responses and avoid disclosing more than the information minimally necessary to make a proper appeal.

For additional information or advice regarding Marketplace notices and appeals, contact qualified legal counsel.

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Photo of Monique Warren Monique Warren

Monique Warren is a Principal in the White Plains, New York office of Jackson Lewis P.C. Ms. Warren is a member of the Employee Benefits Counseling, Executive Compensation, Benefits Litigation and Workplace Privacy Practice Group.

Ms. Warren counsels employers on employee benefits compliance…

Monique Warren is a Principal in the White Plains, New York office of Jackson Lewis P.C. Ms. Warren is a member of the Employee Benefits Counseling, Executive Compensation, Benefits Litigation and Workplace Privacy Practice Group.

Ms. Warren counsels employers on employee benefits compliance and administrative matters, drafts plan documents and employee communication materials, and represents employers to government agencies and in employee benefit litigation. Her expertise includes health and welfare plans as well as retirement plans.

Ms. Warren has spoken at numerous client and professional association events including SHRM and WEB meetings. She also has presented numerous seminars on employee benefits compliance topics including benefits basics for human resource professionals, HIPAA privacy and security, 409A requirements, and annual legal updates.

Prior to joining the firm in 2006, Ms. Warren was a member of the employee benefits group of a large Chicago law firm and later maintained her own practice in Illinois, representing employers in employee benefits, employment and employment-related immigration matters. While attending law school, she was an intern in the tax clinic at Loyola University Chicago School of Law and was a judicial extern for the Honorable Blanche Manning, Federal District Court, Northern District of Illinois. As a law student, she received academic honors and was a member of the moot court employment law team.

During the ten years prior to attending law school, Ms. Warren directed human resource functions in manufacturing and research enterprises. She was certified as a Senior Human Resource Professional by SHRM in 1996.