And Now The OBAMACARE Paperwork Challenge

Since open enrollment in the health insurance exchanges ended as of March 31, 2014, employers should be prepared to soon start receiving notices from the exchanges to indicate if an employee has claimed eligibility for a premium tax credit. Since the employer mandate was delayed until 2015 or 2016, depending on the size of the employer, these notices are not as important this year as they will be in 2015 and beyond.

However, employers will need to establish a procedure and have it in place for dealing with these notices.

Premium tax credits - An employee only is eligible to receive a premium tax credit to purchase coverage on an exchange if the employee is not eligible for coverage through their employer or that coverage is considered unaffordable. If a full-time employee receives a premium tax credit on the exchange, an employer may be subject to a tax penalty, beginning in 2015 for employers with more than 100 employees, and in 2016 for employers with 50 to 99 employees.

Notices - When an employee receives a premium tax credit to purchase coverage through the exchange, the exchange will send the employer a notice. Employers then have 90 days to appeal the exchange's determination of eligibility for the premium tax credit. If the employee is full time and not offered affordable coverage, the employer will be subject to a tax penalty. However, the exchanges will be sending notices for every employee that receives a premium tax credit, and some of these employees may be part-time employees or other employees that are not eligible for coverage and would not make the employer liable for paying the tax penalty.  So imagine you are a large hospitality or retail company with lots of full-time and part-time employees, you could get a significant number of notices for part time employees. If not in 2014, then certainly in 2015; and you must respond within 90 days or be subject to penalty.

Procedure for dealing with notices - Because of the tax implications, it is essential that employers have a procedure in place for dealing with these notices. Employers should:

• designate an individual or team responsible for promptly analyzing and responding to marketplace queries or notices;
• ensure that systems are programmed for the ability to pull the required data to track and respond to notices; and
• establish a process to ensure the notices are circulated to the correct individual or team to respond; so educate the mail room, managers, and business unit leaders.

Educating employees who may come into contact with these notices is essential. The exchange will send the notice to the location the employee provides. If, for example, you are an organization with multiple locations, the notice could go to a location where your local manager will have to deal with this piece of paper, so you really need some communication with your key employees.