Employer Notice Program Has Begun!

As part of the checks and balance system of the Affordable Care Act (ACA) as it relates to Advanced Premium Tax Credits (APTC) and Cost-Share Reductions (CSRs), health plans were required to submit forms 1095 to the IRS this past Spring to account for those employees eligible to be covered under group health plans.  Recently, the next phase of this auditing system has been launched in the form of letters to employers.

According to FAQ released by the Centers for Medicare & Medicaid Services (CMS):

“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 one month of 2016 and if the FFM has an address for the employer.”

My office has already received phone calls from employers stating they received such a letter and do not know what to do with it.  My advice at this point is to review the following link, and perhaps go as far as appealing the letter.  Do NOT simply ignore it thinking it was sent in error!

https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Employer-Notice-FAQ-9-18-15.pdf

The background of the law regarding eligibility for APTC and/or CSRs when employer coverage is available is often misinterpreted by an employee.  Whether by intent or not, it is unclear who will be responsible.  A common occurrence we have been advised of is when an employee is offered coverage that is by definition “affordable” (i.e. Single cost is less than 9.56% of household income), but the cost to cover spouse and/or children is more than what the employee is willing to have payroll deducted – so he or she may go to the Marketplace and apply for coverage providing the entire cost of the employer coverage (employee and dependent) as the basis for determining affordability.  More often than not, this will result in the employee being awarded APTC, and subsequent notification to the employer that they want to drop the group health plan.

In this type of situation, who will CMS deem responsible?  Will the employer be penalized because their employee misunderstood or misreported the eligibility criteria?  Based upon what we know to be true about the cost of our coverage and what we pay our employees (one of the Safe Harbors for the Employer Shared Responsibility Payment), are we considered a participant in the “fraudulent” actions by dis-enrolling them from our group health plan?  Unfortunately, these and many more questions will be answered as the enforcement of the law develops.

In the mean time, I welcome any and all questions related to Healthcare Reform and the FFM here in Indiana.

Please feel free to contact me for any information regarding Healthcare Reform or the Patient Protection & Affordable Care Act (PPACA).  I may be reached atmichelle@buyhealthinsurancehere.com, or via phone at (260) 484-7010.