Under the Affordable Care Act (ACA), applicable large employers are required to offer minimum essential coverage (that is both affordable and meets the minimum value standard) to at least 95 percent of their eligible full-time equivalent employees. Employer penalties may be assessed in two tiers if the employer fails to offer minimum essential coverage to at least 95 percent of eligible employees and/or the coverage is not affordable and the employees enroll in Marketplace plans.
Minimum value plans must meet both of the following requirements:
Affordable plans must meet one of these safe harbor methods of calculating affordability:
Cost of coverage requires some math, too. For the above calculation, use the lowest priced self-only coverage offered. (You may ignore dependents and actual coverage plan selected by the lowest-paid employee.) Compare the cost of coverage against the employee’s rate of pay for a 30-hour workweek divided by 130 hours per month. (You may ignore actual work hours and schedule for the lowest-paid employee who is eligible for health care coverage.)
Choose one method to meet the safe harbor and stick with it through the entire plan year. If you want to choose another method, you must wait until the following plan year.
Other ACA-related questions:
According to the IRS, applicable large employers have 50 or more full-time or full-time equivalent employees on average during the prior year.
Employees should be aware of how declining or canceling job-based insurance can impact their cost and coverage.
Small businesses can purchase Small Business Health Options Program (SHOP) plans through the SHOP Marketplace.
Employers can offer ICHRAs and meet ACA shared responsibility requirements. The DOL, HHS and IRS issued a final rule in June 2019 explaining how these accounts can now meet ACA requirements.
Be sure to report information timely and carefully to the IRS so that your offer of affordable coverage is properly documented to avoid penalties.
The so-called “Cadillac Tax” was delayed twice but has not yet been repealed. It will tax employers who provide high-cost health care coverage in 2022 if not addressed before then.