Imam Ibn al-‘Qayyim (may Allah have mercy upon) said:
“That he should say: “May Allah have mercy upon you” when he is certain that the person praised Allah. The intent is not that he heard him say: “May Allah have mercy upon you”, rather the intent is the praise itself. So when it is verified, then saying:”May Allah have mercy upon you” follows. Just as if the one who is being replied to is deaf and he sees that he is moving his lips with the praise of Allah” [Zaad al-Ma’aad (2/401)]
In regards to reminding someone who forgot to say: “All praise is due to Allah”, then the correct opinion is that a person does not remind the one who forgot to say: “All praise is due to Allah” after sneezing.
Imam Ibn al-Qayyim (may Allah have mercy upon him) said: “If he leaves off saying Alhamdulliah, is it recommended for those present to remind him to say Alhamdulliah? Ibn al-‘Arabi said: “He does not remind him. This is ignorance from the one who does it. An-Nawawi said: “He is mistaken whoever claims that. Rather a person should remind him and it is reported from Ibraahim an-Nakha’i. It is from the door of advice, enjoining good, and cooperating upon righteous and piety”.
The apparent Sunnah strengthens the statement of Ibn al-‘Arabi because the Prophet (ﷺ) did not say: “May Allah have mercy on you” to the one who sneezed and did not praise Allah. He did not praise Allah and the Prophet (ﷺ) did not remind him. This is a type of censure for him (ﷺ) by preventing the person the blessings of supplication due to what that person has prevented himself of blessings and praise of Allah. So Allah made him forget and the hearts and the tongues of the believers turned away from saying “May Allah have mercy on you” and supplicating for him. If reminding him was Sunnah, the Prophet (ﷺ) would be most deserving of doing it, teaching it, and aiding it” [Zaad al-Ma’ad (2/401)]
Shaikh Ibn ul-‘Uthaymeen (may Allah have mercy upon him) said:
“So like this, if a person sneezes and does not praise Allah, then do not say to him: “May Allah have mercy upon you”. However, should we remind him to say: “All praise is due to Allah”? No, the Hadith proves that you do not remind him. The Prophet (ﷺ) did not say in the Hadith: “If he sneezes and did not remember Allah, then remind him”. Rather, he said: “Do not say: “May Allah have mercy upon you”. So we do not say: “All praise is due to Allah”. However, after that it is upon us to inform him that if a person sneezes, he should say: “All praise is due to Allah”. And that is by way of teaching” [Sharh Riyaad as-Saliheen (4/441-442)]
And Allah Knows best
Faisal bin Abdul Qaadir bin Hassan