It’s been a while since we last provided an update on Obamacare rules, but two changes – while fairly minor in nature – recently popped up that merit a quick review by HR reps who need to be in the know.
The two minor changes under the Affordable Care Act (ACA) are:
Inflation adjustments for the affordability safe harbor percentages: Under the ACA, the threshold for determining whether a health plan is “affordable” to an employee is 9.5 percent of household income. However, for 2016, this threshold has been adjusted for inflation and becomes 9.66 percent. Not a huge jump, but one that could easily catch you out if you have employees who have previously been on the threshold.
Penalty increases: Blame inflation again for the following change to ACA noncompliance penalties. Initially, applicable large employers that don’t offer coverage to at least 95 percent of their full-time employees would be subject to a $2,000 per-employee penalty (minus the first 80 employees in 2015 and the first 30 employees thereafter). In addition, employers that offer unaffordable coverage were subject to a $3,000 per-employee penalty for each worker who obtained coverage on an exchange. According to IRS Notice 2015-87, that penalty has now increased to $2,080 for the 2015 plan year and $2,160 in 2016. In addition, the $3,000 per employee penalty was bumped to $3,120 for 2015 plan year and $3,240 for 2016.