HR teams need to price their benefits to drive engagement and retention. It is more vital now than ever because of the post-pandemic desire among employees for more meaningful and useful benefits, and health care is at the top of that list.
But, managing healthcare benefits pricing under ACA affordability rules can be a puzzle. Do you know, offhand, what your ACA Penalty B risk is, based on your health plan premium cost-share? If you’re shaking your head at that question, you’re not alone. The ACA has complex rules but the law is crystal clear on one thing: employer-sponsored health care needs to be affordable. Where that crystal-clear mandate gets muddy is figuring out exactly what “affordable” means.
Under the law, you need to offer a plan that costs less than or equal to that years Federal Poverty Level (FPL) for of an employee’s household income or face penalty. The FPL in 2021 is 9.83% but is expected to change in 2022. With the modest increases in FPL, plans that were affordable under FPL for 2021 plan year, may no longer be affordable.
Last we checked, most HR pros don’t have a crystal ball to see what an employee’s household income actually is. That’s what “safe harbors” are for. But which safe harbor should you use: the federal poverty level, the rate of pay or the W-2? And even when using the ideal safe harbor, what is your penalty risk under your current employer/employee benefit cost share?
The fact is, it’s complicated, and becoming more so.
That’s why, at Health e(fx), we created our ACA Affordability Calculator to take the guesswork out of it for you. The Health e(fx) ACA Affordability Calculator will help you understand how to adjust your cost share to best fit your ACA risk tolerance. It’s an online tool that assesses your lowest-cost minimum value plan for your employee segments under each safe harbor.
How it works
The calculator is a simple, online dashboard that shows your employee-only lowest-cost minimum value plan analysis at a glance.
- Choose your employee population group
- Select your cost share
- View a population snapshot
- Model different enrollment curves
- Calculate how incremental changes to the monthly employee premium cost impacts your penalty risk, employer premium cost and total company spend.
With it, you can work to minimize your total costs and penalty risk and determine your ideal safe harbor by population. There’s nothing like it on the market today. It gives you unparalleled insights to support your health care plan pricing strategy and help you make informed decisions about your ACA penalty risk.
A word about those penalties. Expect more enforcement on the road ahead. The IRS is expected to be doing away with “good faith relief” for ACA reporting that has given companies a break who get it wrong. And the Biden White House is doubling down on funding the IRS to make sure it has the staff to keep up with enforcement. The time is now to get the ACA right in your company, or face the very real possibility of hefty fines.
Read more on our Health e(fx) ACA Affordability Calculator here to ensure you don’t get slapped with hefty fines later. Then read our 2021 Insights Report, “Pandemics, Politics and Insights into ACA Trends and Penalty Risk” for the latest information and data on the complex ACA to make sure you’re in compliance.