As employers with calendar year plans gear up for open enrollment, they should consider ACA requirements.
Applicable large employers must offer affordable minimum essential coverage that provides minimum value to full-time employees and their dependents or pay an employer shared responsibility tax penalty to the IRS. Employers should make sure plans for the 2017 year meet these requirements.
An employer is an applicable large employer for the current year if had at least 50 full-time employees including full-time equivalent employees, on average during the prior year.
Minimum essential coverage is coverage under an employer-sponsored medical plan. It does not include indemnity coverage, life insurance, dental coverage or vision coverage.
Coverage is considered to provide minimum value if it covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan.
Coverage is considered affordable if the lowest-cost self-only health plan coverage costs 9.5% (as indexed for inflation) of an employee’s household income. Since employers generally do not know their employees’ household incomes, employers can use an affordability safe harbor, such as the employee’s Form W-2 wages, the federal poverty line, or the employee’s rate of pay.
