Take a deep breath. The HHS Health Insurance Marketplace Notice (the “Notice”) may seem to be a nuisance, but it does not necessarily mean that you will be subject to employer shared responsibility penalties.
First, the IRS, not HHS, assesses employer shared responsibility penalties, and the IRS does so only after it provides employers with: (1) a “certification” that one or more employees received a premium tax credit; and (2) an opportunity to respond to the certification.
Second, an individual may have incorrectly reported on his application that he was eligible for a premium tax credit (or cost-sharing reductions) because: (1) he did not receive an offer of health coverage from you; (2) he did receive an offer of health coverage from you, but it was unaffordable or it failed to provide minimum value, or (3) he was in a waiting period and was unable to enroll in health care coverage. Therefore, the employee’s eligibility for a premium tax credit (or cost-sharing reductions) might have been a mistake.
Third, you may not be subject to the employer shared responsibility rules (and any penalties thereunder) if, for example, you are not a “large” employer. See our Employer Shared Responsibility Penalties: A Checklist for Employers to determine whether you are a “large” employer.
Fourth, if you think that the Notice incorrectly identifies an individual as an employee eligible for a premium tax credit (or cost-sharing reductions), you may file an appeal with HHS within 90 days of the date on the Notice, which could potentially eliminate reports from the Marketplace to the IRS that your employee received a premium tax credit (or cost-sharing reductions) and reduce the individual’s potential tax liability.
Unfortunately, filing an appeal with HHS may not resolve the issue entirely. For example, HHS may contact you for more information regarding your appeal. Furthermore, although the appeal may prevent the Marketplace from reporting incorrect information to the IRS, ultimately the IRS will independently determine whether you are subject to any employer shared responsibility penalties.