Compliance Update: Marketplace Subsidy Notifications

Many employers have started to receive letters from Health and Human Services (HHS) informing them that one or more of their employees have received a subsidy towards their coverage in the federal Health Insurance Marketplace. The letter is to confirm the individual employee’s eligibility for that subsidy. One of the criteria for an individual to receive a Marketplace subsidy is that they do not have access to employer coverage that is affordable and provides minimum value, therefore HHS needs to contact employers to determine if the individual provided correct information.

In the letter, HHS warns employers that they may be subject to the employer mandate penalty based on the employee’s eligibility for a subsidy. However, receiving this letter does not mean that the employer is being penalized. Only the Internal Revenue Service can assess an employer mandate penalty, and the IRS needs to analyze the recently filed forms 1094 and 1095 before determining which employers did not follow the mandate.

Currently, HHS is investigating individuals to ensure any subsidies they paid out were correct. In general, an employer would file an appeal if they believe the employee received a Marketplace subsidy in error, meaning the employee was offered employer coverage that met all of the ACA requirements. Many employers have received letters for employees who are part-time employees and not eligible for employer coverage.

The following link is a Compliance Alert from Peter Marathas and Stacy Barrow of Marathas Barrow & Weatherhead, LLP, with additional details on the Marketplace Subsidy Notice and how to respond to it. It includes information on how to file an appeal if the employee was offered employer coverage that is affordable and provides minimum value.

For more information or answers to any questions, please contact your client representative at The Fedeli Group.