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.