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Regulation and Compliance > Federal Regulation > IRS

PPACA employer mandate may start two-step fights

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Employers with what federal regulators view as iffy health benefits may soon be lawyering up for two rounds of employer mandate penalty administrative appeals.

Nicole Elliott, a partner in the Washington office of Holland & Knight, talked about the two-step administrative appeal process recently in a telephone interview.

Elliott now works on Patient Protection and Affordable Care Act (PPACA) issues for clients in the private sector. She previously was the senior director of operations for PPACA issues at the Internal Revenue Services. From June 2014 to February 2016, she managed IRS efforts to determine how the IRS should implement the PPACA “employer shared responsibility” provisions.

Related: IRS offers employers PPACA penalty estimator

What will the work day of an employer mandate appeal lawyer be like? 

Elliot said that’s not yet clear.

“We really don’t know a lot about the employer appeals process,” Elliott said.

The field of PPACA tax administration as a whole “is huge,” Elliott said. “You just pull a string, and there’s more and more.”

For more about what Elliott said about the IRS, PPACA and the employer mandate appeals system, read on:


1. Employers are not yet piling into Elliott’s office with employee APTC user notice questions.

The PPACA employer mandate provisions require affected employers to go through an elaborate employee counting process, and send Form 1095-C health coverage offer summary notices to the health plan enrollees, former enrollees and the IRS.

Affected employers that fail to offer any health coverage, or fail to offer what federal regulators classify as affordable coverage with a minimum value, may have to pay penalties of $2,000, or $3,000, for every full-time employee who uses Medicaid or Advanced Premium Tax Credit subsidies because of a lack of access to affordable employer-sponsored minimum essential coverage.

The Center for Consumer Information & Insurance Oversight, an arm of the Centers for Medicare & Medicaid Services, recently said that each exchange will decide, under the certification rules set by PPACA Section 1411, whether the employee Advanced Premium Tax Credit users really lacked access to affordable minimum essential coverage from their employers.

The IRS is supposed to determine whether an employer actually owes a PPACA coverage mandate penalty, and how big any penalty will be.

The Center for Consumer Information & Insurance Oversight said a Centers for Medicare & Medicaid Services contractor is already calling employers to verify the employer plan information that exchange plan users have been putting in their Advanced Premium Tax Credit applications.

Elliott has written about the employer mandate appeals process for Holland & Knight clients. She said that, at this point, the number of employers coming to her with detailed questions about the appeals process, or with an actual Section 1411 certification notice from a PPACA public exchange, is low.

PPACA tax specialists are not sure when the Section 1411 notices will go out, or how many will go out, Elliott said.

“We know they’ll go out in batches,” Elliott said.

Some employers — in other words, your clients — could already be receiving the notices, she said.

Related: 3 ways new PPACA employer rules could hit your clients

 Mouse playing chess with a cat

2. How the appeals process really works could vary from employer to employer.

Avoiding the mandate penalty may be a minor nuisance for employers with generous health benefits, and employers with no benefits may simply have to resign themselves to paying the penalties, Elliott said.

Elliott said the nature of the rules means that the big filers of appeals are likely to be employers in retail, the hospitality industry and similar industries that are trying to offer just enough health coverage value to avoid having to pay the mandate penalty.

For the employers near the shared responsibility edge, the Section 1411 notices “will serve as an early warning” about the possibility that a penalty notice from the IRS may also be coming, Elliott said.

Related: What if you disagree with an exchange?

IRS building

(Photo: Allison Bell)

3. The IRS PPACA implementers didn’t write PPACA.

Elliott said benefits advisors should understand that IRS staffers are simply trying to implement PPACA as well as they can, whether they agree with the law or not.

“They’re dedicated tax administrators,” she said. “Whether they like or hate the law is really irrelevant.”

The IRS holds regular stakeholder meetings to try to lighten the administration burden as much as it can, she said.

She said IRS PPACA implementers are keenly interested in the comments they get on proposed regulations, procedures, forms and information collection systems.

Comments stating that a proposal looks fine can be as helpful to implementers as comments identifying concerns about a proposal, Elliott said.

See also:

Employers may be stickier

IRS moves to kill ultra-skinny self-insured plans

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