The chickens may be coming home to roost! One issue that I have discussed with individuals and small businesses since the implementation of the ACA is the reality that many individuals simply do not understand that they are not eligible for subsidies.
Since enforcement process was not really in place, many have likely gotten away with it. But now the process is in place. Remember those 1095 forms that you recently completed? That is one step in the data matching process. The other is the individual’s application. Individuals are now asked to complete information regarding employment on their application for coverage.
HHS (Department of Health and Human Services) recently published a sample employer notice regarding employees who obtained a subsidy on the Exchange. Employers will want to be on the lookout for these notices since they are new and may not be readily understood by the staff opening the mail.
The letter will notify the employer that the employee reported one of the following scenarios:
- Didn’t have an offer of health care coverage from the employer
- Did have an offer of health coverage, but it wasn’t affordable or didn’t provide minimum value; or
- Was in a waiting period and unable to enroll in health care coverage.
The employer is then advised that they may be required to pay a shared responsibility payment (Penalty) if they have more than 50 employees. The employer is advised that they have an option to appeal the action.
If an employer has less than 50 employees they may feel they can simply so state and that is the end of it. But it is important to understand that even if the employer has less than 50 employees and they offer creditable (affordable & minimum value) coverage, it should also report this information.
Prior to this year, it could be argued that an employee made an honest mistake when answering the application question about “affordable insurance”. There really wasn’t any readily available guidance to the employee, unless they searched for it.
So an employee may simply have answered the question about whether they had “affordable” coverage available to them as “no”. Most people would not consider a premium of 9.5% of their income “affordable”. Add in the cost for dependents if there is no employer payment toward dependents and most people would answer a resounding NO to the question.
This year the Covered CA site has provided more guidance to the individual completing the application via a little question mark. Whether the individual clicks to see the guidance is questionable.
In reality some people know full well that they are not eligible but decide to proceed anyway. In fact, I have had people come to my office and when I explained that they were not eligible, they suggested that they would just go online themselves and apply with different answers to the questions.
In the past, there really was not a way to check this information. With the new process and cross-referencing it is clear that this will now be addressed.
A large group employer might find themselves annoyed that an employee appeared to be committing fraud. However, the employer is prohibited from doing anything that involves termination of employment for this action. However, there are some that believe you can at least discipline the employee for the actions.
The International Foundation of Employee Benefits has prepared a sample letter to give to an employee if you are appealing their ACA subsidy. I am happy to share this upon request. Remember you only have 90 days to respond, so be sure to let your staff know to watch the mail this summer.
