The American Staffing Association released an article addressing the Affordable Care Act. The ACA requires health care exchanges established under the law to notify employers when employees have been certified as eligible to receive tax subsidies in the form of advance premium tax credits or cost-sharing reductions, and advise employers that these might result in an employer tax assessment.
Here’s what you need to know:
- The exchanges must establish an appeals process to allow employers to challenge eligibility determination & provide a way for them to estimate potential exposure to the tax assessment under IRS Code Sec. 4980H(b) based on the number of full-time employees getting subsidies.
- The ability to estimate this potential liability is important for staffing firms trying to make decisions regarding the type of health insurance coverage to offer their temporary and contract employees in 2016.
- No notices have been issued in 2015 by any of the 34 federal health care exchanges that are operated by the U.S. Department of Health and Human Services. Nor have the exchanges set up an appeals process to challenge subsidy determinations.
- In a notice issued Friday by the U.S. Centers for Medicare and Medicaid Services, employers have been advised that no notices will be issued at all for 2015 and that none will be issued for 2016 until spring at the earliest.
- Contrary to the urging of employers that penalties be waived for 2015 because of the failure to issue notices, the IRS says it plans to issue “b” penalty tax assessments for 2015.
- IRS officials said tax assessments for 2015 will not be issued until after employers file their 2015 Form 1095-C reports in March 2016.
- Employers receiving assessments will be given an opportunity to challenge the assessment, and final assessments will be made only after the challenge process has been completed.
- The CMS notice applies only to the 34 federal health care exchanges that are operated by HHS and to state exchanges classified as “federally facilitated” or that operate on the federal platform. The 16 states that established their own exchanges, plus Washington, DC, are unaffected.
- No employer notices have been issued by the federal exchanges, and there is scant evidence any have been issued to staffing firms in the 16 nonfederal exchanges. ASA members have reported receiving notices from at least two state exchanges, but the number has been extremely low.
- The ongoing uncertainty surrounding the number of employees getting tax subsidies means staffing firms can only guess at their exposure to the “b” penalty in 2016 if they offer only basic minimum essential coverage plans.
- Meaningful data likely will not be available until the IRS sends out its 2015 tax assessments and the federal exchanges finally start issuing employer notices-neither of which will occur until well into next year.