ACA Employer Shared Responsibility Penalties Increase
For 2019, the Affordable Care Act (ACA) employer shared responsibility penalties are set to increase. As a reminder, these penalties apply to any month in which at least one full-time employee of an applicable large employer (ALE) receives a premium tax credit for purchasing coverage through the marketplace and either:
The ALE does not offer minimum essential coverage (MEC) to at least 95 percent of its full-time employees (and their dependents). (4980H(a) Penalty)
The ALE offers MEC to at least 95 percent of its full-time employees (and their dependents), but the coverage offered is unaffordable or does not provide minimum value. (4980H(b) Penalty)
The penalty amounts are adjusted each year based on the “premium adjustment percentage” determined by the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS). Applying the premium adjustment percentage for 2019 that was published by HHS and CMS earlier in 2018, the penalty amounts for 2019 (determined on a monthly basis) will increase to:
4980H(a) Penalty = 1/12 of $2,500 × total number of full-time employees employed by the ALE (full-time employee count is reduced by 30 for this purpose)
4980H(b) Penalty = 1/12 of $3,750 × each full-time employee who receives the premium tax credit
Note that for 2019, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to an employee does not exceed 9.86 percent of the employee’s household income. Additionally for 2019, to meet the federal poverty level safe harbor to determine affordability, an employee’s premium payment cannot exceed $99.75 per month.
We have recently partnered with SyncStream Solutions and encourage you to learn about their industry leading ACA solutions. Additionally, we are co-hosting a webinar on Tuesday October 9th and would invite you to join us. Register here…
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