Under the ACA employer mandate, applicable large employers are required to provide affordable coverage that provides minimum value to full-time employees and their dependents. To determine affordability, every year, the IRS reviews the cost-sharing limits for group health plans and adjusts them for inflation. And for 2019, the shared responsibility affordability percentage, meaning the maximum amount employees can be required to pay for monthly premiums based on the least expensive health plan offered, went up.

In 2019, the lowest cost self-only option must not exceed 9.86 percent of an employee’s household income, which increased from 9.56 percent in 2018. Employers who don’t know their employees’ household income and choose to use one of the three affordability safe harbors – Form W-2, rate of pay or federal poverty line – should use this new limit when assessing whether the safe harbor has been satisfied.

If you’re a large employer, be sure to consider the new threshold amount when setting cost-sharing amounts for next year and offer at least one plan that meets the requirements. Otherwise, you risk penalties for failing to meet the ACA affordability threshold. And they’re steep: $3,480 annually per employee in 2018, with the penalty yet to be set for next year.

For information about your group health plan coverage for next year, contact Complete Payroll Solutions at 877.253.9020.

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