Employer Offers but Does Not Contribute

[rugerred]

I have just run into a prospect whose employer offers limited liability plans and one that meets minimum ACA requirements. They do not contribute to the premium. She would qualify for a subsidy due to the fact they don't contribute correct?

Crappy employer offering no matter what happens.

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[AllenChicago]

Incorrect assumption Rugerred. Here's the official wording from the I.R.S..

5. Who is eligible for the premium tax credit?

You are eligible for the premium tax credit if you meet all of the following requirements:
•Purchase coverage through the Marketplace.
•Have household income that falls within a certain range (see question 6).
•Are not able to get affordable coverage through an eligible employer plan that provides minimum value (see questions 8 and 9).
•Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE.
•Do not file a Married Filing Separately tax return.
•Cannot be claimed as a dependent by another person.

Ref: Questions and Answers on the Premium Tax Credit
ac

 

[Ann H]

AllenChicago is right.

Some large employers can't afford the insurance and can't afford the penalty. Since there are 2 penalties, they design a duo of plans like this. One meets Minimum Essential Coverage standards so that they don't have a penalty for not having insurance. The other meets the 60% actuarial value standard so they don't have a penalty for having inadequate/unaffordable coverage. Usually they target the premium for the second plan so that all or most of their employees' premiums are under 9.5% of household income.

So, in your client's case, since the employer offers a plan that meets minimum ACA requirements (which I assume means at least 60% actuarial value), your question is, "is it affordable?". Is the premium that the employee pays for his/her share of the self-only premium less than 9.5% of the household MAGI income? If so, then no subsidy.

Since the employer does not contribute to the cost of the plan that meets 60% actuarial value, there is a greater likelihood that the premium will be unaffordable for some folks. But every family must do the math for themselves.

By the way, even though the limited benefit MEC plan is not at least 60% actuarial value, if she actually ENROLLS IN it, she's stuck. She had better disenroll during OEP, otherwise she won't have an SEP for voluntarily dropping it. While she is ENROLLED IN it, she is not eligible for a subsidy, even though it is not at least 60% actuarial value.

 

[AllenChicago]

I've noticed that the only "required" field when completing the employer section of the Marketplace Subsidy Application is "Employer Phone Number". Since HHS/IRS does not know what health coverage every Employer offers, isn't it likely that confirmation calls from HHS to Employers are/will be made?

 

[rugerred]

Thank you for the answers. For some reason I had it in my head that if the company did not contribute that would make a difference.

I am pretty sure that you are correct in that the company is offering the least amount necessary to avoid the penalty.

Her social worker had the same idea about company contribution.

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[rugerred]

I have one more question. What if the employer plan is NOT ACA compliant? They told the prospect that they weren't going to get compliant plan until November.

Thanks for the guidance and help.

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[LGilmore]

Also I really don't know of any group plan medical that is, that doesn't require at least a 50% employer pay towards the premium. So if this is 100% employee premium???

How big is this group?

 

[unic.consulting]

Thank you for the answers. For some reason I had it in my head that if the company did not contribute that would make a difference.

I am pretty sure that you are correct in that the company is offering the least amount necessary to avoid the penalty.

Her social worker had the same idea about company contribution.

Sent from my Samsung Galaxy

Rugerred, The company would have to pay at least 50% on individual plans in order to qualify for the tax credit. It doesn't affect the members subsidy qualifications.

 

[Ann H]

It is possible for the company to have a pre-aca plan that renews in November. It does not have to comply with all the ACA features in order to block your client from a subsidy. It just has to be at least "adequate" (60% actuarial value), and "affordable"

 

[rugerred]

Thank you Ann that is exactly the case here. Your help is greatly appreciated.

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