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During the past couple of weeks, many employers received notice from the Marketplace indicating one of their employees was qualified for advance premium tax credits. Many are asking what is this notice and how should deal with it. The following explains what the notice is and what steps an employer should take.

What is this Notice?

Under Section 1411(e)(4) of the Affordable Care Act, a Marketplace must notify an employer if any of its employees is determined to be eligible for a premium assistance credit (or the cost-sharing subsidy) because the employer does not provide minimal essential coverage through an employer-sponsored plan, or the employer does offer such coverage but it is not affordable.

Under 45 CFR Section 155.310(h), the notice must:

  • identify the employee, providing the minimum necessary personally identifiable information;
  • state that the employee has been determined eligible for advance payments of the premium tax credit, listing the potential reasons for the determination (instead of the actual reason) and without providing tax return information;
  • indicate that, if the employer has 50 or more full-time employees, the employer may be liable under the employer responsibility rules of Code Section 4980H; and
  • notify the employer of its right to appeal the determination.

Under Section 1411(e)(4)(B)(iii) of the Affordable Care Act, a Marketplace must provide this notice regardless of the size of the employer even though the employer mandate penalties only apply to applicable large employers (ALEs).

In addition to the above notice, a Marketplace may also contact the employer to determine whether its employees are enrolled in or are eligible for affordable, minimum value coverage under an eligible employer-sponsored plan, as provided in 45 CFR Section 155.320(d)(3)(iii)(D).

What should an employer do after it receives this notice?

The employer may appeal a determination that an employee is eligible for advance payments of the premium tax credit based in part on a finding that the employer did not offer qualifying coverage to the employee, as provided in 45 CFR Section 155.310(h). While a Marketplace's determination does not itself trigger the employer mandate penalties (those penalties are assessed by the IRS), employers offering coverage that should not result in the receipt of advance payment of premium tax credits may wish to use the appeals process to ensure, as much as possible, that their employees are not mistakenly receiving such payments.

The appeal may be conducted by either a Marketplace or by HHS if a Marketplace has not established an appeals process.

A Marketplace must allow employers to request an appeal within 90 days 

from the date of the notice from the Marketplace and permit employers to submit relevant evidence to support the appeal, as provided in 45 CFR Section 155.555(c). An employer may request an appeal by completing an appeal request form. Click on link below to obtain a copy of the request form:

An employer may mail or fax an appeal request.  Under 45 CFR Section 155.555, this appeals process must give employers the opportunity to:

  • present information to a Marketplace for review of the determination, including evidence of the employer-sponsored plan and employer contributions to the plan; and
  • have access to the data used to make the determination to the extent allowable by law.

Under 45 CFR Section 155.555(d), once a Marketplace receives a valid appeal request, it must:

  • timely acknowledge the receipt of the request,
  • provide an explanation of the appeals process,
  • inform the employee of the appeal, and
  • provide the employee with instructions for submitting any additional evidence for consideration by the appeals,

Under 45 CFR Section 155.555(i)(3), the standard of this review is a de novo review. A de novo review means a review of an appeal without deference to prior decisions in the matter.

Under 45 CFR Section 155.555(g), as part of the review process, the employer must be given the opportunity to:

  • provide relevant evidence for review of the determination of the employee's eligibility for advance payments of the premium tax credit or cost-sharing reductions;
  • review the information identifying the employee, information regarding whether the employee's income is above or below the threshold by which the affordability of employer-sponsored minimum essential coverage is measured, and other data used to make the determination, to the extent allowable by law.

The Marketplace's decision is required to be provided to both the employer and employee generally within 90 days of the date the appeal request is received, as provided in 45 CFR Section 155.555(k).

If the employer's appeal is successful, a Marketplace will send a notice to the employee encouraging the employee to update his or her Marketplace application to reflect that the employee has access to or is enrolled in other coverage. Under 15 CFR Section 155.555(k), the employee has the right to appeal the decision.

This appeal decision does not foreclose any future appeal rights the employer may have under the Internal Revenue Code for excise tax liabilities. While an appeal of a notice by the Exchange may be beneficial, employers are not necessarily required to make this appeal to preserve their rights against the later potential assessment of Code Section 4980H liability, as provided under 45 CFR Section 155.555(k)(1)(ii).

For a copy of the employer appeals process regulations, please click on the link below: 

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