Appealing an employee’s ACA subsidy? Here’s what you need to do

Heads up: HHS is about to start notifying employers about the 2016 subsidies on the federal exchange.  

And whether it’s the result of intentional fraud (think part-time worker claiming full-time status) or a simple error, you may find out an employee received a premium tax credit when your firm actually provided ACA-compliant healthcare coverage.

So what should you do if you receive an inaccurate subsidy notice?

Step No. 1

The first step is to appeal to HHS and let the agency know that your company offered ACA-compliant coverage. Once employers receive a notice, they have 90 days to appeal, and the agency posted a specific appeal form on HealthCare.gov, which can be found here.

Of course, because the IRS is the agency that actually imposes the ACA penalties, you’ll also have to let the Service know about the mistake.

IRS has said it will notify employers about potential penalties and give them a chance to respond before actually assessing those penalties.

Step No. 2

Letting an employee know you plan to appeal an ACA subsidy can be a bit more complicated. For one thing, if the subsidy was the result of an honest mistake and your appeal is successful, the employee may have to repay the tax credit he or she received.

When notifying an employee about the appeal, it should be written (for documentation purposes) and reviewed first by an attorney.

It should cover the reasons for the appeal (We believe the health insurance we offered you for 2016 meets the ACA …) as well as what can happen as a result (contact from feds, repayment, etc.).

The notice should also steer employees to relevant ACA resources and offer to answer any questions about your benefits.

Lois Gleason, CEBS, offers an excellent template of such a notification here: