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If an employee applies for an Exchange subsidy and the Exchange determines, based on the application, that the employee is entitled, the Exchange will send the employer a "section 1411 certification". The employer will have 45 days to contest it. The employer will be able to provide information of what MEC (minimum essential coverage) was offered to the employee, at what cost to the employee in share of the premium. The employer will also be able to provide information about what the employee is paid by the employer. The employer will not, of course, be provided information about what the rest of the employee's household might earn. But if the employer has opted for the design-out safe harbor, the question is whether the employee would have to pay more than 9.5% of what the employer paid the employee for employee-only coverage. So the employer could prove that it has offered employee-only coverage at a cost to the employee of no more than 9.5% of what the employer pays that employee. This is the IRC 4980H(b) penalty. As for the IRC 4980H(a) penalty, by March 31 after the end of each calendar year (beginning with 3/31/2016 for 2015), the employer will have to file a new IRS Form 1094-C, giving a month-by-month count of its Full-time Employees (per new federal definition and counting rules, Prop. Treas. Reg. 54.4980H-3). The Forms 1095-C send to individual employees (and copied to the IRS) will report which employees were offered MEC for which months in the reported year. The IRS computers will cross-check to determine if for each calendar month of the reported calendar year that the employer offered MEC to at least 95% or all but 5 of its Full-time Employees. If it has not met that breadth requirement, then if even on Full-time Employee applies and qualifies for Exchange subsidized coverage, the employer will face the 4980H(a) penalty = (# of Full-time Employees - 30)*$167/month. The IRS will calculate such penalties for each month of the closed and reported calendar year, and send the employer a billing for its 'shared responsibility' assessment.