ACA Health Insurance: Avoid “Double Dipping” and Penalties

Understanding ‘Double Dipping’ in ACA Health Insurance

In the world of health insurance, “double dipping” occurs when an individual receives duplicate benefits for the same coverage. Specifically, it refers to receiving both an Advanced Premium Tax Credit (APTC) from the ACA marketplace and an employer-sponsored Health Reimbursement Arrangement (HRA).

APTCs are government subsidies that help low- and moderate-income individuals and families reduce their monthly health insurance premiums. HRAs, on the other hand, are employer-funded accounts that employees can use to reimburse themselves for eligible health expenses, including premiums.

Receiving both subsidies for the same coverage is considered double dipping and is prohibited by federal regulations.

Consequences of Double Dipping

Individuals who unintentionally double dip may face costly penalties from the IRS. The penalty is typically equal to the amount of APTCs received and can be a significant financial burden. It’s important to avoid double dipping to protect yourself from potential fines.

How to Rectify Double Dipping

If you realize that you’ve been double dipping, it’s crucial to take immediate action to rectify the situation. There are two main options:

Return the APTCs: Contact the IRS to request a refund of any APTCs you received while also receiving HRA reimbursements.
Stop receiving HRA reimbursements: If your employer allows it, you can request to stop receiving HRA reimbursements for health insurance premiums. This will eliminate the double dipping issue.

Steps to Avoid Double Dipping

To avoid double dipping in the future, follow these steps:

If you are eligible for an APTC, do not use an HRA to reimburse yourself for health insurance premiums.
Inform your employer if you are receiving APTCs and have an HRA, so they can adjust your compensation accordingly.
Regularly review your health insurance and financial situation to ensure that you are not inadvertently double dipping.

By understanding the rules and consequences of double dipping, you can protect yourself from penalties and ensure that you are receiving the maximum benefits from your health insurance coverage. If you have any questions or concerns, it’s advisable to seek guidance from a licensed agent or insurance professional for personalized assistance.