As you know, the Affordable Care Act (ACA) instituted in 2010 has dramatically impacted the landscape of health care benefits for both employers and employees. You also know that many employees have not given much attention to ACA individual mandates or available ACA tax credits or subsidies. With new 1095 forms on the horizon, we expect that questions from employees and family members will likely increase.
LARGE EMPLOYERS–BEST PRACTICES FOR HANDLING EMPLOYEES COLLECTING ACA SUBSIDIES
Even if you offer a health plan that is deemed both affordable and meets or exceeds the minimum value requirements under the ACA, it is possible that an employee may choose to purchase a health plan through the Exchange and receive a subsidy on the coverage. The subsidy could come as a result of an employee erroneously reporting that the employer-offered health plan was either unaffordable or did not meet the minimum value requirements. An employee collecting a subsidy in error can reap havoc on an applicable large employer (ALE), who would be responsible for penalties. The employee would also be responsible for repaying the subsidies they received if, in fact, they were not eligible.
So what can you do about it?
- Tell your employees. Help your employees understand during open enrollment or as you distribute the 1094/1095 forms of your plan’s affordability and whether it meets or exceeds the minimum value.
- Appoint a primary HR contact for ACA questions. Essentially you are required to do this for form distribution. Having one person in your office handle all questions related to the ACA will help ensure your answers are consistent and give you the opportunity to track conversations.
- Track all inquiries. As simple as it sounds, you could be hearing from employees, the IRS, as well as a state or federal exchange. Create a spreadsheet or use fields within your benefit or payroll administration system to track all inquiries. Keep in mind that you have 90 days from the time you receive a notice from the IRS or Exchange to properly appeal the subsidy with the health insurance exchange. Read more in the Frequently Asked Questions issued by the Center for Consumer Information and Insurance Oversight (CCIIO) in September 2015.
ALL EMPLOYERS–HELPING EMPLOYEES UNDERSTAND THE FORMS
This January your employees will begin receiving 1095 forms. In addition to this being a new form for them, there will likely be additional confusion because the number and type of forms received will vary from person to person. An individual who works for a large, self-funded employer will receive only Form 1095-C, whereas an individual who works for a large, fully insured employer will receive Forms 1095-B and 1095-C. Other individuals may not receive any forms, for instance, those who work for small employers who do not offer coverage, or those who work for small employers and waive their employer’s plan.
We have prepared a document to help you proactively communicate with your workforce and answer questions from them and their family members. Please contact your Hylant representative for a copy of this document, which can be customized based on your current health plan funding arrangement and total full-time employee count.