A Guide to 2020 ACA Affordability Percentages for Employers – with Affordability Calculator!
Updated February 11, 2020
Despite all the efforts to repeal the Affordable Care Act (ACA), employers should know that the ACA employer mandate remained in full force in 2019 and for now, will remain so in 2020 and beyond. A key component of that employer mandate is offering affordable healthcare coverage to eligible full-time employees.
Affordable Healthcare Coverage Defined
Under the ACA, ALEs (Applicable Large Employers) must periodically (usually monthly) offer at least 95% of their eligible full-time employees quality health insurance coverage, and fulfill all ACA reporting requirements around that, or risk paying penalties.
Qualifying plans must offer:
Minimum Essential Coverage (MEC)
Minimum Value (MV): the plan must pay at least 60% of the costs of covered benefits
Affordable Coverage: A plan is considered affordable if the employee’s required contribution for the lowest cost self-only health insurance option offered by the employer does not exceed 9.78%* of the employee’s household income. This applies even if the employee selects a different health insurance coverage option.
*Note: The IRS adjusts this amount annually based on the federal poverty line percentage.
Each of these requirements has its own intricacies, so it’s best to consult with a knowledgeable insurance broker before choosing a plan for your company. They will be able to tell you if the plan meets MEC and MV standards.
Let’s dive a little deeper on the affordability aspect of these plans.