Hausmann Group May 13, 2016 6 min read

Legislative Brief: Exchange Subsidy Appeals


In this months legislative brief, we discuss changes and delays to the appeals process of the ACA.

Beginning in spring 2016, employers can expect to receive notices if any of their employees are deemed eligible for health insurance subsidies through an Exchange. Employers who receive these notices will have 90 days to file an appeal if they feel the eligibility determination was made in error.

Department of Health and Human Services (HHS) regulations require appeals to be accepted online, by phone, by mail and in person. However, guidance issued in March 2016, delayed the Exchanges' deadline to implement electronic appeals processes.

Action Steps

Employers, especially applicable large employers (ALEs), should prepare to appeal any incorrect Exchange determinations. To prepare, employers should:

  • Become familiar with the appeals process; and
  • Maintain complete and accurate records regarding the health insurance coverage they offered to employees.


Under the ACA, ALEs may be subject to employer shared responsibility payments (pay-or-play penalties) if they do not offer affordable, minimum value health coverage to their full-time employees. The IRS will assess these penalties if a full-time employee receives subsidies to help pay for the cost of health insurance purchased in the Health Insurance Marketplace (Exchange).

The ACA gives all employers the right to appeal Exchange eligibility determinations. An appeal will allow an employer to correct any inaccurate information the Exchange may have about the health coverage it offered to an employee who was deemed eligible for subsidies.

Appeals Guidance

In 2013, the Department of Health and Human Services (HHS) issued a rule for appealing Exchange eligibility determinations for both individuals and employers.

This requires Exchanges to accept appeal requests by phone, mail, in person, or via the internet. The final rule also requires Exchanges to transmit employee eligibility records through a secure electronic interface. In order to allow time for appeals entities to implement these systems, HHS allowed them to use the paper-based process for another year. The HHS has extended that flexibility again until December 31, 2016. Therefore, employers and individuals may be required to file their appeals on paper only, until January 1, 2017.

Exchanges will start sending their first batches of employer notices regarding employee eligibility for subsidies in spring 2016.

Employer Appeals Process

Once an Exchange determines that an individual is eligible for subsidies, it must send notification to the individual's employer. This notification must:

  • Identify the employee;
  • Indicate that the employee has been determined eligible for advance payments of the PTC;
  • Indicate that, if the employer has 50 or more full-time employees, the employer may be liable for the payment assessed under Section 4980H of the Code; and
  • Inform the employer of the right to appeal the determination

If the employer wishes to appeal the determination, it must file an appeal request within 90 days from the date the notice was sent. Information on how to do this is available here.

If the entity determines that an appeal request is not valid, it must send written notification to the employer and include instructions for curing the defects. The entity will also send notice of an employer's appeal and an explanation of the appeals process to the employee.

During the appeals process, the appeals entity must give the employer an opportunity to review the information.

An appeals entity must make, and send written notice of, an appeal decision within 90 days after the date it received the appeal request.

If the appeals decision affects the employee's eligibility, the Exchange must promptly make a re-determination. Employees and their household members will have a right to appeal re-determination that occurs as a result of an appeals decision.