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So You Think You Are Done With 1095-Cs Until Next January? Think Again…


You may recall that I indicated in prior newsletters and blogs that completing and filing the 1095-Cs for the 2015 calendar year were only the first steps in this reporting process. Now the real fun begins. The time is now to be on the lookout for initial notices regarding ACA penalties. 

Notice Letters 

The Centers for Medicare and Medicaid Services (CMS) which oversees the Federally-Facilitated Marketplace (aka the Exchange) will begin sending batches of notifications to certain employers whose employees received premium subsidies when purchasing health insurance on the marketplace Exchange.  Employers should be on the lookout for these notification letters since they may otherwise be disregarded because:

  • The notice letters might not be readily identified because it is unclear from whom they will come from;
  • It is uncertain what employer representative will receive these CMS letters; and
  • Office staff will be seeing them for the first time so there will be no familiarity with these letters or their purpose.

These letters could and will (by at least one employer) be treated as junk mail and discarded immediately into a circular file. There would be repercussions to the employer since the employer must address the information in these notice letters.  

A link to the publication from CMS regarding the 2016 Employer notice program can be found at:   https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Employer-Notice-FAQ-9-18-15.pdf

What do I do once I receive a notice letter? 

When explaining these notices during compliance audits the first question often asked by employers is “Why would we get these notices since we offered insurance to all of our employees and our insurance included minimum essential coverage that was affordable coverage?”

The truth is that these notices are not really accusations that the employer did not provide any of the aforementioned insurance attributes, but rather the notices result from situations where an individual (your employee):

  • Waives your employer insurance
  • He/she then calls the Healthcare.gov helpline or completes the enrollment online information
  • The employee attests that his or her employer failed to provide affordable minimum value coverage or even understates his/her income in order for the employee to receive coverage subsidies based on his or her own statements made to Healthcare.gov.

So what does this mean? It means the CMS is trying to determine whether the statements by the employee were accurate or not since it has other information (from the employer) that suggests wrong information was disclosed by the employee. Other examples where notices may be sent out would be in situations where uninsured part-time employees, contractors, seasonal employees, leased employees or temporary employees might have received subsidies because they claimed they were full-time employees of the employer. Whether obtained by fraud or mistake, when an eligible employee receives subsidies (besides the employee getting hit with a repayment penalty) there is risk to the employer if these subsidies are being improperly paid to ineligible individuals.

What action can be taken against the employee? 

Other than the employer conveying the accurate information to the CMS, the employer cannot do anything that involves termination of employment. If it is proven that the employee intentionally committed fraud, it is my opinion that disciplinary action such as a write-up can occur, but I would hesitate to allow an employer to proceed any further with the disciplinary process for a first offense. Why? Because there are ACA retaliation rules in effect that apply to employers. These rules include a provision that states that a company cannot “discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee (or an individual acting at the request of the employee) has received a credit under the ACA or reported any violation of, or any act or omission the employee reasonably believes to be a violation of the ACA.” 

I feel that there is some wiggle room here. I do not see how these ACA retaliation rules prevent you from disciplining an employee trying to commit fraud since discipline is not discrimination until or unless it impacts employment, wages, conditions of employment, etc. A mistake is an entirely different situation that should not result in any discipline. What also remains to be seen is what can be done to an employee who intentionally commits fraud for multiple years. That would seem to put the employer in a precarious position and significant discipline for repeated abuses may take priority over the ACA retaliation rules.

Act Fast: You Have 90 Days to Appeal

If an employer receives a notice, it needs to act on it quickly.  I would also suggest that you call your HNI representative or outside legal counsel to get assistance on properly completing the appeal request form.  Employers only have 90 days to appeal and the Employer Appeal Request Form located at:  https://www.healthcare.gov/marketplace-appeals/employer-appeals/

It should also be noted that be pointed out that the Healthcare.gov website states that:  

“This appeal will NOT determine if an employer has to pay the fee. Only the Internal  Revenue Service (IRS), not the Health Insurance Marketplace or the Marketplace Appeals Center, can determine which employers are subject to the fee.”

Key Takeaways

CMS will begin to send out ACA notice letters to employers this summer. These notices are the result of employees going on to the exchange to secure health insurance coverage that was subsidized.  If you provided health insurance that had minimum essential coverage that was affordable, the employee would only have received subsidized health insurance if the employee had reported or listed incorrect information about the employer’s health insurance plan, whether intentional or unintentional, which then triggered the IRS to indicate that an Employer Shared Responsibility Payment was present. This process then allows the employer to provide evidence that indicates that the employee disclosed false information.


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