- 396
Empolyees portion only or the total costs of the cheapest plan?
9.5% is Figured On?
- Thread starter SouthernComfort
- Start date
- 416
Employee only portion.
The Employee's portion of the premium for:
1. Employee-only coverage
2. for the Employer's cheapest group plan that meets 60% actuarial value
The 9.5% is based on household MAGI income for purposes of qualifying for a subsidy.
The 9.5% is based on the employee's income that is shown in Box 1 of the W2 for purposes of the safe harbor for the large employer "play or pay" penalty.
- 416
when it comes to these issues its like typing your question into the ACA information computer search engine powered by annhoo.... type in question and out pops the answer in full blown detailed format... no one will ever match her knowledge on matters related to subsidy calculation and taxes
Ann's answer is perfect, especially if you're trying to find out if an employer's offering is "affordable" to your client.
Here's some math if you're working with an employer and want to find the minimum contribution while avoiding all penalties.
(Premium of cheapest compliant plan)-[(Box 1 of form w-2 for the LOWEST paid eligible employee)*.095]=minimum contribution
For instance:
$4800-($30000*.095)=$1950
So, $4800/year for the cheapest plan, and $30,000 W-2 box 1 income for the lowest paid eligible employee, means the employer is compliant if they offer $1950/year as a contribution.
Here's some math if you're working with an employer and want to find the minimum contribution while avoiding all penalties.
(Premium of cheapest compliant plan)-[(Box 1 of form w-2 for the LOWEST paid eligible employee)*.095]=minimum contribution
For instance:
$4800-($30000*.095)=$1950
So, $4800/year for the cheapest plan, and $30,000 W-2 box 1 income for the lowest paid eligible employee, means the employer is compliant if they offer $1950/year as a contribution.
Last edited:
- 416
Are we looking for the lowest paid worker, or the worst ratio among the whole workforce? For instance, if the lowest paid worker is 21 and makes $10/hour, but the second lowest paid worker is 63 and makes $11/hour, don't we want to work with the 63 year old's figures to ensure compliance?
- Thread starter
- #9
- 396
So, husbands salary is 570/wk, and he pays 60/wk for the least expensive plan. 570x52=29640
29640x.095=2815.80
2815.80/12= 234.65/mnth
He is currently paying $240 so he exceeds the 9.5% threshold?
29640x.095=2815.80
2815.80/12= 234.65/mnth
He is currently paying $240 so he exceeds the 9.5% threshold?
If you are trying to figure out if the employer has a penalty, then this calculation will work, provided that the employer meets the other qualifications for the safe harbor for employer penalties.
If you are trying to figure out if the client can get a subsidy, then you must use full household MAGI (Modified Adjusted Gross Income), not just the husband's income from his job. "Full household" means everyone that is on the tax return.
