ACA compliance has been a key factor for employers the past few years. Keeping up with the updates as they come is the best way to stay prepared for your next plan year!

As times are changing, so is the Affordable Care Act (ACA). Don’t worry, no major changes are on the horizon. But each year we see an update on what the IRS is considering to be affordable coverage for your employees.

ACA Update

The IRS has released an update for 2019 compliance. Due to inflation, they have updated the percentage of household income used to determine the affordability of the coverage offered by the company. This update has increased each year. In 2017 we saw a rate of 9.69%. For all plans beginning in 2018, we see a 9.56%. In 2019 the percentage will increase to 9.86%.

In other words, for 2019 the minimum employee premium contribution must be less than or equal to 9.86% of the employee’s household income in order to be considered affordable under the ACA.

Questions to Ask

Because you may not necessarily know your employee’s household income, here are three questions you can ask to help figure it out:

1. Does your lowest-cost employee-only coverage exceed 9.68% of their W2 form wages?
2. Does your lowest-cost employee-only coverage exceed 9.68% of their hourly wages multiplied by 130?
3.  Does your lowest-cost employee-only coverage exceed 9.68% of the federal poverty line for a single person?

If the answer to any of these questions is yes for your company, it may be time to rethink your 2019 coverage.

Want Performance HCM to help you track, report and produce your ACA forms? Our new election forms will be going out in August!

Additional Resources

For resources on ACA, please visit our ACA Central!

For all the technicalities you can check it out in the IRS’s words here.

If you’d like to know more about the federal poverty level check this out