How to Choose the Right Health Insurance Broker
Selecting the right health insurance broker is essential, especially with the
The Internal Revenue Service recently released Revenue Procedure 2019-29 which included details on the affordability percentage related to the Employer Shared Responsibility provisions of the Affordable Care Act (ACA), also known as the Employer Mandate. In 2020, an applicable large employer (ALE) will be considered to offer affordable coverage to its full-time employees if the cost of coverage is 9.78% or less of the employee’s household income. This is a decrease from the 2019 affordability percentage which is currently set at 9.86%.
Most employers don’t know the household income of their employees, and employers can continue to use one of the three safe harbor methods when determining if coverage is affordable: W-2 method, monthly rate of pay method, and the federal poverty level method.
Additionally, earlier this year the Department of Health and Human Services (HHS) released the 2020 Notice of Benefit and Payment Parameters. This is a ruling that is issued each year which addresses changes to the ACA, including inflation adjustments.
The inflation adjustment percentage that is utilized for the Employer Mandate implies the penalty under Code Section 4980H(a), sometimes referred to as the failure to offer penalty, will be increased to $2,570 multiplied by the number of full-time employees in excess of 30 (assuming at least one full-time employee receives a subsidy on the Exchange). In 2019, the failure to offer penalty is $2,500 multiplied by the number of full-time employees in excess of 30 (assuming at least one full-time employee receives a subsidy on the Exchange).
Assuming an ALE meets the offer requirements but coverage is either unaffordable or does not provide minimum value, the inflation adjustment percentage that is utilized for the Employer Mandate implies the penalty under Code Section 4980H(b) will be increased to $3,860 for each full-time employee who receives subsidized coverage on the Exchange. This is an increase from $3,750 in 2019.
The penalties under the Employer Mandate started at $2,000 under Code Section 4980H(a) and $3,000 under 4980H(b). The affordability percentage started at 9.5%. Each year these numbers are adjusted with the penalties increasing and the affordability percentage changing upwards or downwards.
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