![]() The new 9.12% level marks by far the lowest affordability percentage to date, as well as the first time the threshold has dropped below the initial 9.5% standard set by the ACA. This week the IRS issued Revenue Procedure 2022-34, which significantly decreases the affordability threshold for ACA employer mandate purposes to 9.12% for plan years beginning in 2023. Where possible within budgetary constraints, employers should prepare to offer at least one medical plan option to full-time employees in all regions with an employee-share of the premium not exceeding $103.28/month for employee-only coverage to simplify affordability compliance under the federal poverty line safe harbor.Ģ023 Affordability Percentage Set at 9.12% 2023 Contribution Strategy Considerations: Consider the ACA affordability safe harbor requirements when designing 2023 employee contribution levels to avoid potential employer mandate “B Penalty” liability.While the calculation is straightforward and mostly routine now, employers should prepare early to avoid being caught off guard by the increased employer contributions required to keep the plan affordable at the much lower 9.12% rate for 2023. This approach applies an analysis of the lowest hourly rate of pay for hourly full-time employees and the lowest monthly salary for salaried full-time employees. 2023 Lowest-Cost Plan Exceeds $103.28/Month (Rate of Pay Affordability Safe Harbor): Employers that do not offer a medical plan option meeting the 2023 federal poverty line affordability safe harbor (i.e., the lowest-cost plan option at the employee-only tier costs employees more than $103.28/month) should generally utilize the rate of pay affordability safe harbor.2023 Lowest-Cost Plan is No More Than $103.28/Month (Federal Poverty Line Affordability Safe Harbor): Employers with a calendar plan year offering a medical plan option in 2023 that costs employees no more than $103.28 per month for employee-only coverage will automatically meet the ACA affordability standard under the federal poverty line affordability safe harbor that deems coverage affordable for all full-time employees (and permits the employer to use qualifying offer method for streamlined ACA reporting). ![]() 2023 ACA Affordability Percentage (Large!) Decrease to 9.12%: The IRS has announced that the ACA affordability percentage used to determine compliance with the employer mandate will decrease dramatically from 9.61% in 2022 to 9.12% in 2023 (by far the lowest level to date) of the employee’s household income, as determined under one of the safe harbor approaches.Patient Protection and Affordable Care Act Updating Payment Parameters, Section 1332 Waiver Implementing Regulations, and Improving Health Insurance Markets for 2022 and Beyond Proposed Rule. Department of the Treasury and Department of Health and Human Services. ![]() Minimum value and actuarial value determinations under the Affordable Care Act. Small and large business health insurance: state & federal roles.Īmerican Academy of Actuaries. National Conference of State Legislatures. HHS Notice of Benefit and Payment Parameters for 2023 Final Rule Fact Sheet. Patient Protection and Affordable Care Act Market stabilization.Ĭenters for Medicare and Medicaid Services. Revised final 2018 actuarial value calculator methodology. A summary of the 2020 actuarial value calculator. Final 2022 Actuarial Value Calculator Methodology. ![]() Department of Health and Human Services HealthCare. ![]()
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