The Affordable Care Act came out and you checked in and made sure you were compliant. However, as things change, you may need to check again.
On April 12, 2016, the Internal Revenue Service (IRS) released new guidance on the percentages used to determine what is considered “affordable” health coverage.Under the Affordable Care Act (ACA), the affordability of an employer’s plan may be assessed for the employer shared responsibility penalty, the individual mandate and the premium tax credit. The affordability test varies for each provision.
For plan years beginning in 2017, employer-sponsored coverage will only be considered affordable if the employee’s required contribution for self-only service coverage does not exceed:
- 9.69 percent under the employer shared responsibility rules (up from 9.66 percent in 2016). The shared responsibility rules, or pay or pay rules, require applicable large employers (those that employ 50 full-time employees or full-time equivalents) to offer coverage that does not exceed 9.69 percent of an employee’s household income for the year.
- 9.69 percent under the premium tax credit eligibility rules (up from 9.66 percent in 2016). If employees’ required contributions exceed 9.69 percent, those employees could be eligible for a premium tax credit through the Marketplace, which could result in penalties for employers.
- 8.16 percent under an exemption from the individual mandate (up from 8.13 percent in 2016). Individuals that lack access to affordable, minimum value coverage are exempt from the individual mandate.
Failing to offer coverage that meets these requirements could result in significant penalties for your business. Please note that these percentages only apply to individual coverage, and do not include additional costs for family coverage.
If your company offers various health coverage options, the affordability test applies to the lowest-cost option that also meets the minimum value requirement established by the ACA.
These new requirements are effective for taxable years and plan years beginning after Dec. 31, 2016.
For more information on these requirements, contact Deeley Insurance Group today.
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