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Problem with Notice 2014-55 opt-outs?


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Couldn't allowing an employee to change his cafeteria plan election mid-year due to a reduction in hours or for the purpose of going to the Marketplace potentially expose the large employer to the "b" penalty?

Imagine an employee whose hours are reduced to the point that the employer coverage is now unaffordable so he'll qualify for subsidies?

Or the employee who enrolled in unaffordable employer coverage and now discovers Marketplace subsidies?

Would it be too "creative" to only allow mid-year opt outs if the employee agrees to not apply for subsidies?

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If employer offers the employee affordable coverage that provides minimum value, then the employee is not eligible for the subsidy -- no "b" penalty. If the employee reduced hours below 30 and is not full time (assume no stability period), then no "b" penalty.

The above should not "b" a problem.

The problem that could arise is what happens if the employee reduces hours and thus reduces pay, is still in a stability period as full time, but the coverage is not affordable. This implicates what safe harbor the employer is using to measure affordability.

That could "b" a problem.

Allowing an "opt out" conditioned on not obtaining subsidies would most likely violate the ACA anti-retaliation rules.

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