By Jen Carsen, JD, Legal Editor

While the IRS thoughtfully extended the filing deadline for Forms 1094-B, 1094-C, and 1095-C to May 31, 2016 (if filing nonelectronically) and to June 30, 2016 (if filing electronically), you are hopefully long done with the worst of the process—because you had to get Forms 1095-B and 1095-C to your employees by the end of March.

Now there’s even more fun employers can look forward to: The Federally-Facilitated Marketplace’s (FFM) 2016 Employer Notice Program, run by the Centers for Medicare and Medicaid Services (CMS).

What’s that, you may ask? It’s a program you may find yourself a less-than-enthusiastic participant in if you fail to meet your obligations under the play-or-pay rules—or, worse, if the government simply believes you failed to do so; more on this below.

Advance premium tax credits for employees = penalties for employers

As you probably know, the Affordable Care Act (ACA) requires the various health insurance marketplaces (Marketplace) to notify any employer whose employee was determined eligible for advance premium tax credits (APTC) and cost sharing reductions (CSRs) because the employee attested that he or she was neither enrolled in employer sponsored coverage, nor eligible for employer coverage that is affordable and meets the minimum value standard.

Starting in 2016, the FFM will notify certain employers whose employees enrolled in Marketplace coverage with APTC. The FFM will send notices to employers if the employee received APTC for at least 1 month in 2016 and if the FFM has an address for the employer. The program will expand to additional employers in 2017 and beyond.

What will the notice say?

The notice will identify the specific employee and include a statement that the employee is enrolled in Marketplace coverage with APTC; it will not contain the employee’s personal health information or federal tax information. Note that, for 2016, the FFM will not notify employers when an employee who was benefiting from APTC or CSRs terminates Marketplace coverage.

We’re in a state with a state-based marketplace (SBM)—what happens here?

CMS reports that SBMs have the same flexibility to phase in their employer notices process in an effort to enhance operational efficiency and improve stakeholder engagement. SBMs will continue to have the option to refer employer appeals to the HHS appeals entity. (So you’re not off the hook, in other words.)

When are these notices going out?

The FFM is sending notices in batches, with CMS reporting that the first batch will go out sometime in spring 2016—so anytime now. This will likely be the largest batch of notices, says CMS, as it will include employers whose employees enrolled in Marketplace coverage with APTC during Open Enrollment, which ended on January 31, 2016. The FFM will send additional batches of notices throughout 2016.

If you think you may be receiving a notice, be on the lookout so you don’t accidentally toss it as junk mail. For 2016, all notifications will be coming through postal mail rather than via e-mail, though the process may change in future years.

What if we receive a notice and want to appeal?

The short answer—act promptly. You have just 90 days from the date of the notice to request an appeal.

An employer may appeal an employer notice by asserting that it provided the employee access to affordable, minimum value employer-sponsored coverage, or that the employee is enrolled in employer coverage, and therefore that the employee is ineligible for APTC.

If the employer is successful, the FFM will send a notice to the employee encouraging the employee to update his or her Marketplace application to reflect that he or she has access to or is enrolled in other coverage. The notice will also explain that failure to update the application may result in a tax liability.

How do we submit an appeal?

An employer appeal request form will be available here: www.healthcare.gov/marketplace-appeals/. You must mail your completed appeal request to the below address, or fax it to 877-369-0129.

Health Insurance Marketplace
465 Industrial Blvd.
London, KY 40750-0061

What about 2015?

This new initiative is focusing on coverage for 2016 and beyond only. Employers will be liable for the employer shared responsibility payment for 2015 if a full-time employee receives a premium tax credit for coverage received through a Marketplace in that year. The IRS will independently determine any liability for the employer shared responsibility payment without regard to whether the Marketplace issued a notice or the employer engaged in any appeals process.

Anything else I should know?

When someone seeks insurance on the Marketplace, there’s generally no cross-check on what coverage (if any) the person has been offered by his or her employer. There’s also no check on whether this person is actually one of your full-time employees, as defined by the ACA—he or she could be, for example, a freelancer or part-timer.

So the bottom line is that you as an employer may have fully complied with all of your play-or-pay obligations and still receive a notice that a full-time employee (or someone claiming to be a full-time employee) has received subsidies—putting you squarely in line for penalties unless you take prompt action and file your appeal.

The FFM is not the sort of pen pal any of us is looking for, but it’s important to keep a close eye on your mailbox now and in coming months all the same.