Appealing Marketplace Decisions & IRS Letters
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Both the Health Insurance Marketplaces and the Internal Revenue Service (IRS) have begun sending letters to employers to enforce the Affordable Care Act’s employer shared responsibility provisions (also known as “pay or play”).
Health Insurance Marketplace Letters
Health Insurance Marketplaces must notify employers that one or more of their employees has been determined to be eligible for advance premium tax credits and cost-sharing reductions, and has enrolled in a Marketplace plan. Because these events may trigger penalties under pay or play, applicable large employers subject to these provisions—generally those employers with at least 50 full-time employees, including full-time equivalent employees—may seek to appeal an employee’s eligibility determination.
How Employers Can Appeal a Marketplace Decision
Employers have 90 days from the date stated on the Marketplace notice to file an appeal. In the appeal, the employer may assert that it provides its employee access to affordable, minimum value employer-sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for advance payments of the premium tax credit or cost-sharing reductions.
This appeal can generally be filed two ways, either by:
1. Filling out the Employer Appeal Request Form; or
2. Submitting a letter with the following information:
• Business name;
• Employer ID Number (EIN);
• Employer’s primary contact name, phone number, and address;
• The reason for the appeal; and
• Information from the Marketplace notice received, including date and employee information.
Employers should mail the appeal request form or letter—with a copy of the Marketplace notice—to:
Department of Health and Human Services
Health Insurance Marketplace
465 Industrial Blvd.
London, KY 40750-0061
After a Marketplace Decision Appeal is Filed
After an appeal is filed, the employer will get a letter saying the appeal was received. The letter will provide a description of the appeals process and instructions for submitting additional materials if needed.
In general, the Marketplace will inform employers of its decision and mail its response within 90 days of when the Marketplace receives the appeal request.
The IRS has begun issuing Letter 226J to ALEs it determines had one or more full-time employees that were enrolled in a qualified health plan for which a premium tax credit was allowed for at least one month in the year (and the ALE did not qualify for an affordability safe harbor or other relief for the employee). Letter 226J includes, among other things:
• A penalty payment summary table, itemizing the proposed payment by month;
• An “employee premium tax credit list” which lists, by month, the ALE’s employees who for at least one month in the year were full-time employees allowed a premium tax credit and for whom the ALE did not qualify for an affordability safe harbor or other relief;
• A description of the actions the ALE should take if it agrees or disagrees with the proposed penalty payment; and
• Form 14764, a response form.
A response to Letter 226J is due by the response date shown on the letter, which generally is 30 days from the date of Letter 226J. Letter 226J also contains the name and contact information of a specific IRS employee that the ALE can contact if the ALE has questions about the letter.
How to Make a Pay or Play Penalty Payment
If, after correspondence between the ALE and the IRS, the IRS determines that an ALE is liable for a penalty payment, the IRS assesses the payment and issues a notice and demand for payment, Notice CP 220J. That notice instructs the ALE on how to make a payment, if any. Notably, ALEs are not required to include the payment on any tax return that they file or to make a payment before notice and demand for payment.