ACA Reporting
ACA Compliance Lessons Learned From Recent Reporting Seasons
Common themes emerge when reflecting on recent ACA reporting seasons that can help employers reduce administrative burdens and improve accuracy.
Employers
Affordable Employee Health Care Premiums in 2024: What HR Professionals Need to Know
Employers may have to reduce employee premium contribution costs in 2024 to avoid compliance issues.
Simplify ACA Reporting with Our Affordable and Accurate Solution
As an HR professional, staying abreast of the all important health care compliance landscape is paramount, especially if you are subject to the Affordable Care Act’s employer mandate. One crucial aspect of compliance is ensuring that the health coverage offered to employees is “affordable.” Affordability for ACA purposes is calculated by examining household income, with various safe harbor methods to determine it (see our article on ACA Affordability Safe Harbors), and then multiplying household income by the IRS-announced annual affordability percentage. Failing to offer affordable coverage can expose employers to substantial penalties.
The IRS released the maximum affordability percentage for 2024 which is 8.39%, down from the 2023 rate of 9.12%. This shift implies that even if an employer does not change premium costs in 2024, the employer may no longer be considered to be offering affordable coverage.
For instance, with an employee household income of $60,000, the maximum premium for employee-only single coverage in 2023 would have been $456 per month. In 2024, with the same income, this maximum drops to $419.50 per month. Should the employer maintain the $456 per month premium for 2024 without adjustments, they risk incurring penalties for offering unaffordable coverage.
It is essential to review premium amounts for affordability before open enrollment each year, even if the dollar amount of the premium is not changing. In years like 2024, where the affordability percentage decreases, premium adjustments may be required to ensure that coverage remains accessible to employees and to avoid potential compliance pitfalls and large ACA penalties. Stay vigilant and informed to protect your organization and its employees.
Benefit Allocation Systems (BAS) provides online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
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