Section 1411 Notices - Employer Penalties

It has become increasingly important for Applicable Large Employers (ALEs) to comprehend and familiarize themselves with Section 1411 notices from the Exchange/ Marketplace.  When an ALE receives one of these notices, it means that one of their employees recently received a premium tax credit (subsidy) through a health insurance plan that they purchased through the Exchange.  Under the Employer Shared Responsibility provision (Play or Pay), the ALE is required to pay a penalty for either not offering the full time employee(s) health insurance, or the coverage offered to the employee(s) does not meet minimum value requirements or is deemed unaffordable.  When an employee of an ALE enrolls in an Exchange plan and receives a subsidy, they are asked to provide the employer information.  This causes the employee’s employer to receive the notice and the penalty for not meeting ACA compliance standards.  The first batch of Section 1411 notices are expected to be released soon, with the actual assessment to pay the penalty being released sometime during late summer to early fall of 2016. 

If an employer receives a notice, the Centers of Medicare and Medicaid Services (CMS) allows and provides an avenue to appeal the penalty from the employer and the subsidy from the employee.  The appeal form is available on and needs to be completed within 90 days of receiving the notice.  Examples of some reasons to appeal include medical plan coverage was offered to the employee or the coverage was deemed affordable.  ALEs need to also understand that simply because an appeal was submitted, does not mean that they will not receive an assessment notice later for the penalty from the IRS or that the appeal will be approved.  If this does occur, the IRS assessment notice can also be appealed by reaching out to the IRS and using their own appeal process.  For more information click here