The Affordable Care Act (ACA) affordability requirement is being lowered in 2020, compared to the previous year. Employer-sponsored health coverage will meet the requirement if the lowest-cost, self-only coverage option available to employees does not exceed 9.78 percent of an employee’s household income, which is down from 9.86 percent in 2019.
This employee’s maximum contribution percentage is adjusted annually, taking into account the ratio of premium growth to income growth in the prior calendar year.
Employers ought to be careful with these limits, as those who do not stay within these limits may face large penalties.
In order to stay within these limits, some employers will have to reduce the share of employee contribution toward healthcare expenses.
For example, in 2019, an employer using the hourly-rate-of-pay safe harbor can require an employee who earns $12 per hour up to $153.81 per month for self-only coverage. In 2020, this amount changes to $152.56.
In addition, the federal poverty level (FPL) increased last year. Therefore, for employers using the FPL safe harbor, the employee contribution increases from $99.75 in 2019 to $101.79 in 2020.
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Beth Olender is an Account Manager at UBF Consulting helping clients manage their Human Resources, Recruiting, Benefits and Wellness programs. When not working Beth enjoys spending time with her family and friends, weekend get-a-ways, book club, zumba classes, wine tasting, and daily walks with her friendly golden-doodle.
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