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As an HR professional, receiving an Employer Exchange Notice from the Health Insurance Marketplace can be concerning. These notices indicate an employee has enrolled in Marketplace coverage and qualified for a premium tax credit (subsidy) – potentially triggering employer mandate penalties if your organization is an Applicable Large Employer (ALE).
Understanding Marketplace Notices
Marketplace notices inform employers that an employee has:
- Enrolled in Marketplace coverage
- Qualified for premium tax credits
- Certified they weren't offered employer coverage that met ACA requirements
This matters because if your organization is subject to the employer mandate (50+ full-time equivalent employees) and the employee's claim is accurate, you could face penalties of approximately $4,400 per affected full-time employee annually.
Why Employees Receive Subsidies When They Shouldn't
Several situations may lead to employees incorrectly receiving subsidies:
- The employee didn't understand your benefits offering
- Confusion about eligibility requirements or waiting periods
- Misunderstanding about coverage affordability
- Administrative errors in the Marketplace's verification process
- The employee provided incorrect information
Your Response Timeline
When you receive a notice, time is of the essence:
90 days- You have 90 days from receipt to file an appeal if you believe the employee incorrectly received subsidies.
30 days- While the official window is 90 days, responding within 30 days provides better protection against retroactive penalties.
The Appeal Process Steps
- Gather documentation demonstrating your compliance:
- Records showing when the employee was offered coverage
- Evidence that coverage met minimum value requirements (SBC or plan documents)
- Affordability calculations based on your chosen safe harbor
- Documentation of employee's eligibility status
- Evidence of enrollment forms or waiver documentation
- Complete the appeal form:
- Use the "Employer Appeal Request Form" available on HealthCare.gov
- Include your Employer Appeal ID from the notice
- Clearly explain why you believe the determination is incorrect
- Attach all supporting documentation
- Submit your appeal:
- Mail or fax the completed form and documentation to the address/number on the notice
- Keep copies of everything submitted
- Consider using certified mail for proof of delivery
- Participate in the appeal process:
- The appeals entity may contact you for additional information
- Be prepared for potential conference calls to discuss the appeal
- Respond promptly to any requests
Preventive Measures for Future Compliance
To minimize future notices and strengthen your position if appeals become necessary:
Enhance communication about your benefits offerings through multiple channels. Clear explanation of eligibility, coverage levels, and costs helps prevent misunderstandings.
Document everything including:
- Offer of coverage to each full-time employee
- Date offers were made
- Employee responses (enrollment or waiver)
- Affordability calculations
Maintain thorough records of plan designs, costs, and communications with consistent filing systems that make retrieval straightforward during appeals.
Educate employees about the relationship between employer coverage and Marketplace subsidies, explaining that accepting subsidies when eligible for affordable employer coverage may require repayment.
When to Consider Not Appealing
In some cases, you might choose not to appeal:
- When the employee truly wasn't eligible for your coverage
- If your offered coverage didn't meet minimum value or affordability standards
- When documentation is insufficient to support your case
- If the administrative burden outweighs the potential penalty
Final Considerations
Remember that Marketplace notices don't automatically mean penalties will be assessed. They represent an opportunity to demonstrate compliance and protect your organization. By responding promptly with comprehensive documentation, you can effectively navigate this aspect of ACA compliance while maintaining positive employee relations.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
