Why am I getting a “1411 Certification?”

From Labor Attorney Jason Cogdill:

I have received many reports about employers receiving notices from the Marketplace since the middle of last week.  These are “1411 Certifications” from HHS identifying individuals currently receiving an advanced premium credit (or cost-sharing reduction) and whose application referenced a specific employer.  It is likely that the majority of employers will receive at least one of these notices, so if your clients have not communicated to you about the notices, they soon will.  The only employers that will not receive the notices are employers that were not identified by any individual who was approved for a Marketplace subsidy for 2016.  [Note:  The notices are mailed to “Benefits Manager” at the standard business address of the employer.  Employers should likely act to ensure that all notices received make it to the HR/benefits contact to be addressed.]

In the interim, several key points to share with your employer clients receiving the notices:

  • There is no need to panic.  Employers have 90 days from receipt of the notice to file an appeal, if an appeal is needed.  In many cases, no appeal from the employer will be needed.
  • The primary purpose of the notice is to analyze the eligibility of the individual receiving the Marketplace subsidy.  If, for instance, an individual has received an offer of affordable, qualifying coverage from the employer in 2016, then the employer should file an appeal since the individual is not subsidy eligible.  Filing the appeal will aid the Marketplace in getting the subsidy correct (the individual will lose eligibility), and the employer will have taken the first step to confirm that no potential Play-or-Pay penalty applies.
  • On the above point, note that this is not an actual penalty notice/assessment for the employer.  The IRS, not the Marketplace, enforces Play-or-Pay.  The IRS will not identify or assess any employer penalty until after the 1094/1095 forms for 2016 are processed (in 2017).  The IRS can use the Marketplace info in its determination, but no employer will be penalized by the IRS until after formal assessment and opportunity to defend its position.
  • Small employers (under 50) will receive this notice just as large employers will.  Small employers are still exempt from Play-or-Pay, and nothing has changed about that.
  • If the employer does not have information about whether the individual is subsidy eligible in 2016, there is no need to file an appeal.  As an example, if the individual terminated employment before 2016, or the individual is a part-time employee in 2016 and not eligible for health insurance, then there is nothing the employer needs to do.  The fact that the individual identified the employer in his/her application is incidental.  The IRS will still rely on the 2016 Forms 1094 and 1095 filed by the employer in early 2017.
  • If you would like to review a copy of the employer appeal form and instructions, a copy is attached.