Unveiling the Key Differences between Level Funded and Self Funded Plans
Discover the differences between level-funded and self-funded employee health insurance plans.
Senator Susan Collins (R-ME) submitted an inquiry to the Internal Revenue Service (IRS) earlier this year asking two very specific questions. She wanted to know if penalties related to the Employer Mandate could be reduced or waived if it would cause a hardship on an employer. She also wanted to know if the IRS would extend the transition relief that was previously available to employers with 50-99 employees. Previous transition relief exempted most employers of this size from the Employer Mandate during its first year of implementation in 2015.
The IRS responded to Senator Collins in Information Letter 2019-0008. In summary, the IRS said the law does not allow for a reduction or a waiver of any Employer Mandate penalty. The IRS also recognized that transition relief was previously available, but no transition has been available since 2017. Therefore, employers with 50-99 employees must continue to comply with the Employer Mandate requirements or risk penalties. The letter also indicates that it would take legislative action from Congress for provisions related to the Affordable Care Act (ACA), including the Employer Mandate, to change.
That means the Employer Mandate will continue to exist and be enforced as we know it today. In 2019, the Employer Mandate has the following requirements:
Assuming an employer meets the offer requirements, they will avoid the most significant penalties under the Employer Mandate. However, another requirement also needs to be considered to avoid all penalties related to the Employer Mandate.
Discover the differences between level-funded and self-funded employee health insurance plans.
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