This tax year, employers may notice an uptick in documents mailed, due largely to the Affordable Care Act. From tax forms to other notices, much of this paperwork is difficult to decipher, since for many organizations this is the first time they’re reporting on health care coverage for their employees.
One notice in particular may come from the Health Insurance Marketplace disclosing that an employee has obtained health insurance from the Marketplace but also received an advanced premium subsidy. These subsidies, also known as premium tax credits, exist to allow consumers to obtain health care and manage it at an affordable cost.
As you already know, if you are an employer with 50 or more full-time employees and/or equivalents, you are required to offer health care to your employees. Should that minimum essential coverage be deemed unaffordable, then your employee may be eligible for an advanced payment of a subsidy or premium tax credit.
Now, about these notices. The Marketplace is required to send employers notices, which can inform them of their employees’ subsidies, inquire about an employee’s full-time status, and potential tax liability information. To view a full sample letter, sent through the Federally Facilitated Marketplace (FFM), click here.
Some highlights of note from the letter, as revealed through Holland & Knight LLP in a Lexology post dated May 23, 2016.
"Certain employers ... might have to pay an employer shared responsibility payment for any month that at least one full-time employee enrolled in Marketplace coverage and receives APTC [advanced payments of the premium tax credit] or CSRs [cost sharing reductions]."
As you may or may not be aware, should your organization have provided coverage that was deemed unaffordable for the employee and that employee received an advanced payment of the PTC or a CSR, you may have to make an employer shared responsibility payment.
You can appeal this, for example, if the employee is not full-time. However, the letter continues, "Filing an appeal could also eliminate reports from the Marketplace to the IRS that your employee received APTC or CSRs following an appeal decision in your favor." You as an employer have 90 days from the date of the notice to file your appeal. If you have received a notice and feel that the tax liability is not correct, an appeal is necessary. It’s best to contact the IRS immediately upon receipt of a notice with any questions or concerns.