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Affordable Care Act (ACA) Subsidy FAQ

Employees who are not eligible for coverage through the Affordable Care Act may be able to receive a subsidy, or Advance Premium Tax Credit, to help pay for health care when they sign up for a plan through a Health Insurance Marketplace, also called an Exchange.

What is a subsidy?

Subsidies, also referred to as Advance Premium Tax Credits, are available to help pay for coverage through a Health Insurance Marketplace (Exchange). When you sign up for coverage through an Exchange, you will provide information about your household income and size, employment, and current health plan to help determine if you are eligible for a subsidy.*

*Visit Healthcare.gov to learn more about the subsidy application process.

How do I know if I qualify for a subsidy?

When you enroll in coverage through an Exchange, the Exchange will use the information you provide to determine your eligibility for a subsidy. Generally, you must meet all of the following requirements to be eligible for a subsidy*:

  • The plan for which you receive a subsidy must be purchased through an Exchange.
  • You do not have access to affordable, minimum value coverage through your employer or a governmentsponsored program such as Medicare or Medicaid.
  • Your household income is between 100% and 400% of the federal poverty line for your family size.
  • You cannot be claimed as a dependent by another person.
  • If you are married, you and your spouse file a joint tax return.
What is considered "minimum value" coverage?

“Minimum value” typically refers to plans that cover at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan. Visit HealthCare.gov to learn more.

What is considered "affordable" coverage?

“Affordable” coverage under the ACA means that the amount that you pay for a self-only plan (meaning the cost to purchase coverage for just you, not the cost for dependents) does not exceed 9.69% of your household income+. Because your employer is not likely to know your household income, they will calculate the affordability of the self-only plan based on what you are paid using one of three methods:

  • W-2 Wages: The amount of wages reported in Box 1 of your Form W-2
  • Rate of Pay: In general, your rate of pay at the beginning of the coverage period*
  • Federal Poverty Line: Your contribution to the plan per month cannot exceed 9.69% of the Federal Poverty Line divided by 12**

*For more information on how affordable and minimum value coverage is calculated, visit the IRS website

**Value for the 2017 tax year.

How does my subsidy impact my employer?

When you apply for a subsidy, you will provide information about your employment and the health benefits offered to you. If you receive a subsidy, your employer will get a notification in the mail. If your employer was supposed to offer health benefits to you and did not, the notification lets them know that they may be fined. However, if your employer did offer you qualifying coverage and you receive a subsidy, they may choose to appeal your subsidy to avoid any unnecessary fines.

Why would my employer appeal my subsidy?

Your employer may decide to appeal your subsidy if they offered you Minimum Essential Coverage (MEC) that meets the affordability and minimum value requirements. Because they offered qualifying coverage, the appeal can help protect them from a fine. Important: if your employer appeals your subsidy, it does not mean that you will lose it. If your household income and size allow you to qualify for the subsidy, it will not be taken away. However, if you received a subsidy when you weren’t supposed to, you will have to pay some (if not all) of the subsidy amount back when you complete your taxes.

What happens if my subsidy is appealed?

Your employer will complete an Employer Appeal Request Form and submit it to the Exchange. The Exchange will notify you and your employer that they received the appeal and may request more information from both parties. The Exchange will review the case and make a decision, and notify you and your employer of the decision. In most instances, if you disagree with the Exchange’s decision, you will have an opportunity to appeal the Exchange’s decision with the Department of Health and Human Services (HHS).