Affordable Care Act: What Is Affordable Health Coverage?

Affordable Care Act: What Is Affordable Health Coverage?

Posted by The Propel HR ACA Team on 2/3/16 10:00 AM
The Propel HR ACA Team
Posted on: February 3, 2016

All the talk is about AFFORDABLE health coverage but what is affordable health coverage?  

If an employee’s share of coverage (for employee-only coverage) costs the employee more than 9.5% of the employee’s annual household income, then the coverage is NOT affordable.

Since we do not know an employee’s annual household income, the IRS has three safe harbors we can use instead.

Safe Harbors:

  • Form W-2 Wages – Box 1 wages on the 2015 W-2
  • Rate of pay- based on an employee’s rate of pay at the beginning of the coverage period, with adjustments permitted, for an hourly employee, if the rate of pay is decreased (but not if the rate of pay is increased)
  • Federal poverty line – for a single individual

big aca changes in 2017 webinar training

An employer may choose to use one or more of the safe harbors for all of its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category.

Topics: Compliance, ACA

Subscribe to our Blog for Fresh Weekly Content

Year-end 2021 HR Checklist
Featured

From changing Covid-related safety regulations to complying with new labor laws at the ... Read More

Navigating State Laws and Covid-19
Featured

As vaccination rates rise and more workers return to the workplace, employers, especially ... Read More

Complying With State Labor Laws
Featured

In addition to federal laws, employers must also comply with all state laws.  While not ... Read More

hr-division-blog-article

HR Division of Propel HR

The HR Division is made up of a team of professionals with a vast level of experience and HR expertise, assisting organizations of all sizes and within a wide variety of industries. They readily partner with clients to address strategic and compliance challenges surrounding the employment life-cycle and the ever-changing laws that regulate it. Inquire below about how they can help you!