Exchange Subsidy Notices

The Affordable Care Act (ACA) requires state and federal exchanges to send notices to employers identifying employees who have purchased coverage through an exchange and qualified for a premium tax credit subsidy. These initial subsidy notices do not constitute an assessment of a ‘Pay-or-Play’ penalty and will be provided to all employers, regardless of whether the employer employs 50 or more full-time or fulltime-equivalent employees.

Each Exchange Notice will:

  • Identify the employee;
  • Indicate that the employee has been determined eligible for an Exchange subsidy (i.e., advance payment of the premium tax credit);
  • Indicate that, if the employer has 50 or more full-time employees, the employer may be liable for the excise tax assessed under Code Section 4980H; and
  • Notify the employer of the right to appeal the determination

Currently, subsidy notices will be sent to employers at the addresses provided by employees during the Exchange application process. The subsidy notices will provide the employer with the right to appeal the determination that an employee is eligible for a premium tax credit subsidy. If the Employer disagrees with this determination (i.e. if the employee declined the employer’s minimum essential coverage that is affordable and provides minimum value), the employer may, but is not required to, file an appeal. Filing an appeal will be especially beneficial for employers subject to the ‘Pay-or-Play’ penalties, as it can help protect the employer from having to appeal the determination after a penalty tax has already been assessed. Filing an appeal will be especially beneficial for employers subject to the ‘Pay-or-Play’ penalties, as it can help protect the employer from having to appeal the determination after a penalty tax has already been assessed.

For more information about Eligibility Determinations for Exchange Participation and Insurance Affordability Programs, please visit http://bit.ly/1DWx3Ll.

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