Straight To
Your Inbox

Stay Updated

Alerts, insights,
and updates straight to your inbox.

Click to get started


Employers Should Prepare Now for ACA Subsidy Appeals – Subsidies Wrongly Granted May Trigger Employer Penalties; You Have 90 Days to Appeal

ACA subsidy appeals image

July 27, 2016

If employees of your organization applied for Marketplace health insurance and gave certain responses in their application, you may receive a notification from the US Department of Health and Human Services (HHS) that will require your immediate attention.

The HHS is sending notices to employers about employees who claim to be eligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSR) that help pay for Marketplace health insurance coverage.

These notices are addressed to the “benefits manager” of the company and are from the Health Insurance Marketplace. Employers have 90 days to appeal the information provided by your employee when applying for coverage through the marketplace exchange.

The notification may not mean an organization has liability for the employer shared responsibility payment under the Affordable Care Act, but the HHS will share this information with the IRS, which is responsible for determining any applicable penalty. However, if an employer receives the notification, it’s always best to review and determine immediately what – if any – response is needed.

Why Would an Employer Receive a Notice?

Employees are certified to receive coverage subsidies based on their own responses in the Marketplace application process. When applying for coverage in the marketplace, employees are asked (1) if they were offered coverage by their employer, (2) if the coverage provided minimum value, (3) if it was affordable, (4) if the employee was in a waiting period and unable to enroll in health coverage and (5) the name and address of their employer. If the employee responds “no” to any of the first three questions above, the employer listed will receive a notice.

Employees don’t receive any definition of minimum value or affordability in the application process, so they may answer the affordability and minimum value questions as “no” based on their own perceptions, even if the coverage does meet the ACA’s legal requirements. This is why the employer’s response is critical.

What Should I Do if I Receive this Notice?

You should promptly take two steps if you receive a notice:

  1. Determine whether you need to appeal the notice. The need to appeal depends on whether or not you are an Applicable Large Employer (ALE) and whether you offered affordable coverage with minimum value. The appeal can be made through an Employer Appeal Request Form available on the website or in a separate letter containing the pertinent information.
  2. Notify the affected employee. The affected employee(s) will also be notified of any employer appeal, so we recommend you discuss the appeal process with any employee(s) for whom you received a notice – including whether you will appeal, why or why not, and what the possible outcomes are. This can be tricky, because if your appeal is successful, your employee may need to repay the IRS for subsidies already received.

What if I Have Questions?

AGH offers a number of resources for questions about both ACA and the subsidy appeal requirements. If you receive an HHS notification and need to discuss an appeal or learn more about the process, contact payroll manager Sonia Phillips using the information below.

For general information about the ACA, including criteria for Applicable Large Employers (ALE), how to calculate FTEs and reporting deadlines, check AGH’s ACA subsite. To learn more about ACA reporting and compliance, contact Sonia Phillips or AGH senior organizational development consultant Carrie Cox using the information below.

Sonia Phillips

Payroll Senior Manager,
Outsourcing Services
Sonia and her team handle payroll processing, reporting and tax filings for multi-state and multi-site companies. An AGH employee since 1991, Sonia has expertise in both technology and employee benefits consulting as well as payroll. She has helped develop a variety of operational, management and executive information systems projects within and outside the employee benefits industry.

Before joining the outsourcing services group, Sonia managed the technology infrastructure and plan processing systems for AGH’s employee benefits services division. She worked with internal and external clients to accurately assess their information system needs and managed the projects designed to satisfy these needs, as well as any necessary integration.
Sonia Phillips photo
Sonia Phillips

Carrie Cox, PHR, SHRM-CP

Senior Organizational Development Consultant,
Organizational Development & Family Business Services
Carrie has experience in a variety of human resource functions, including labor laws, compensation structures, employee classification, benefits administration, performance management, and human resource best practices. She has served clients in a number of industries including manufacturing, construction, banking, and not-for-profits. Carrie is a member of the national and local chapters of the Society of Human Resource Professionals (SHRM) and serves on the Wichita chapter board of directors.

She is a certified practitioner for the Myers-Briggs Type Indicator® and the Hay Group’s Emotional and Social Competency Inventory. Her additional certifications include Professional in Human Resources (PHR) from the Human Resource Certification Institute and SHRM-CP designated by the Society for Human Resource Management.
Carrie Cox photo
Carrie Cox, PHR, SHRM-CP
Share this page

NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.

Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.