For the first time ever the Federally Facilitated Marketplace (FMM) will send a notice to employers indicating that one of their employees signed up for health coverage through the Marketplace and received an advanced premium subsidy. If an employee signs up for health coverage through the Marketplace and receives a subsidy, that can lead to large tax implications for the employer. Under the “Play or Pay” mandate, an employer with 50 or more full-time employees is required to offer health coverage that is both affordable and of minimum value to full-time employees and their dependents or face the tax. The tax liability is triggered if one of the employer’s employees enrolls through the Marketplace and receives a premium tax credit. That is why it is important for employers to heed these notices or they may be subject to the “Play or Pay” penalties. If an employer does offer coverage that is affordable and of minimum value the employer has 90 days from the date of the notice to file an appeal directly to the Marketplace. Although the IRS will independently determine whether the employer has a tax liability, they will only do so after the year’s tax liabilities have been incurred, therefore it will expedite the process if an employer files an appeal. These Marketplace notices serve as important advance notice to employers that they might incur a tax liability. If an employer receives a notice, it should carefully review the notice and consider filing an appeal.
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