If your employer's group plan is not affordable, you may qualify for an ACA subsidy
When the Affordable Care Act (ACA) was enacted, it placed certain responsibilities on employers that pertained to the health insurance they offered their employees. ACA said the coverage offered by employers had to be affordable and offer a minimum value as defined by ACA.
In today's post I want to talk about the affordability provision and how it impacts you as an employee.
As an employee if you are offered health insurance by your employer and it is affordable and meets the minimum value requirements you are not allowed to receive a federal premium tax credit should you choose to purchase a Marketplace health insurance plan instead.
If you are offered a group plan through your employer and it meets the ACA criteria, you cannot accept a premium tax credit for a Marketplace health insurance plan. If you do, and the IRS finds out, you may have to pay back the premium tax credits you received.
What does it mean for the employer plan to be “affordable”?
ACA has a formula to determine if the employer plan is affordable. One this to remember about this formula is the percentages used, change every year. It’s possible from one year to the next, that a plan could be “affordable” for you and the next year it could be classified as unaffordable.
Let’s look at 2024.
Employer-provided coverage is considered affordable for an employee if the employee required contribution is no more than 8.39 percent (as adjusted) of that employee’s household income. In general, the employee required contribution is the employee’s cost of enrolling in the least expensive coverage offered by the employer that provides minimum value. The employee required contribution includes amounts paid through salary reduction or otherwise, and takes into account the effects of employer arrangements such as health reimbursement arrangements (HRAs), wellness incentives, flex credits, and opt-out payments.
The following information is needed to calculate affordability for 2024:
Total Adjusted Gross Income for your entire household. Not just you, but your entire household.
The cost of the least expensive employee-only plan offered by your employer.
Does the cost of your employer’s cheapest employee only plan exceed 8.39% of your household income? If so, you may be able to apply for a Marketplace Insurance Plan and receive a subsidy to offset your monthly premiums.
If you have questions or need more information, feel free to contact the office at (325) 326-3638 or visit us on the web at www.heartwoodagencygroup.com.
