Employers Must Make Changes Soon to Avoid O'care

[Ann H]

DJS, the subsidy is based on the lowest cost silver plan.

The "affordability" test is that it can cost the person/family no more than 9.5% (on a graded scale) of family income. Inside the exchange, that's for the lowest cost silver plan. For Employer plans, I believe that SportsNut is correct that it's the lowest cost plan the ER offers, but those plans must be subject to EHB's unless otherwise exempted (like grandfathered).

Here is how much a family/person may pay for their health insurance before it is deemed "unaffordable".

100% of FPL - 2% of family AGI used for premium payment
133% - 3%
150% - 4%
200% - 6.3%
250% - 8.05%
300% - 9.5%
300-400% - 9.5%
over 400% of FPL you don't get a subsidy anyway.

Now, as Somarco says, won't that be fun for the employer to figure out?

And yes, based on spendable income (net take-home income), this leaves quite a lot of people with quite a lot less money!

 

[somarco]

Here is what is being overlooked...

Affordable Healthcare is defined [paraphrased] as the lowest ER offered plan to EE (only) the EE oop prem must be 9.5% or lower of the HOUSEHOLD INCOME. So almost any plan will be deemed affordable, wouldn't you think?

Nope.

9.5% of AGI.

Affordable is what the EMPLOYEE must pay after EMPLOYER contribution.

If the employer contributes $200 per month (or $300, or $400) but the amount each employee pays may or may not exceed 9.5% of family AGI. In order to make the plan affordable for each and every employee.

To make the plan affordable (within Alibamacare guidelines) employer may have to contribute more for some employees and less for others . . . which means he runs afoul of existing non-discrimination guidelines from DOL and IRS.

Do you think any of those goobers in DC considered this when writing this friggin' law?

It really doesn't matter if the employer has a bronze, silver, titanium or kryptonite plan. The issue is each employee's AGI.

Mahvelous!

 

[Yagents]

1. Most employers will now take the safe harbor recently released from the IRS, that states the EE must pay no more than 9.5% of the W-2 box 1 income amount. See question #11 here:
Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act

So if EE makes 50k W-2, then employee cannot pay more than $4750 in premium for the year. It has NOTHING to do with out of pocket costs, which by the way are tied to HSA OOP's max of $6250.

If deemed "affordable", employee can NOT get a subsidy off the exchange. If deemed UNaffordable, and if 1 employee gets a subsidy from the exchange, the employer will have to pay $3000 for EVERY employee on the books

2. The employer is NOT required to pay anything for the family/dependent coverage, they must only offer the insurance to the family/dependents. So, the 9.5% affordability test will have NOTHING to do with family income.

3. Most employees who buy on the exchange, will not be able to tax deduct their premium. And, they won't be able to tax deduct their out of pocket costs unless they get an HSA. That's of course assuming that together they don't go above the higher 10% of AGI due to Obamacare.

I have NOT read anything about the self employed health insurance tax deduction being extended in the fiscal cliff deal. Anyone hear anything on that??

 

[VolAgent]

How many employees grossing 50k a year are able to pay 4750 a year for their coverage, not even counting dependents? Even if Obamacare says it is affordable, it probably still won't be affordable for the family.

 

[Yagents]

First thought, who needs a frickin agent, this stuff is cake

Next, 9.5% of any income of any person will be considered unaffordable to most folks......period.

Lastly, don't forget, the family can be spun off the group plan and be eligible for tax subsidies on the exchange. Another reason why the indy market is gonna be huge

 

[taterpeeler]

Lastly, don't forget, the family can be spun off the group plan and be eligible for tax subsidies on the exchange. Another reason why the indy market is gonna be huge

why do I think I read somewhere that if group was offered you had to elect it.... help me, I thought I read that

 

[somarco]

family can be spun off the group plan and be eligible for tax subsidies on the exchange.

Don't think so.

If group "affordable" coverage is available, I don't think EE or family can qualify for subsidies from the xchng.

 

[Yagents]

why do I think I read somewhere that if group was offered you had to elect it.... help me, I thought I read that

If you can't spell, and you can't write.......what makes you think you can read?

No, the employer is just required to OFFER insurance to dependents, but they do not have to take it. Queen shebullsheet called and told me that.
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Don't think so.

If group "affordable" coverage is available, I don't think EE or family can qualify for subsidies from the xchng.

Bob, That's only if the EE portion is "affordable" and the EE goes to the exchange. The rest of the family can go exchange shopping.

Affordability testing is only considering the employee,not the family. Consider family of 4, with one income earner making 60k, stay at home mom, with 2 kids. Group plan is "affordable", so EE pays no more than $5700/yr. To add family to plan, would bankrupt them. Going on exchange for subsidies is the only option. Obama wouldn't have built something that left this family in the cold.

 

[VolAgent]

Don't think so.

If group "affordable" coverage is available, I don't think EE or family can qualify for subsidies from the xchng.

Didn't someone say this was supposed to be affordable?

 

[Ann H]

Bill, I think you have two separate issues mixed together.

I believe the IRS safe harbor rules in your link apply to Employers in regard to whether or not they pay a penalty for having an employee get a subsidy from the exchange. It is basically saying that if the employer has no clue what the family AGI is, but the employer's contribution to the employee's premium puts that employee within the 9.5% of income as reported in box 1 on the W-2, then the employer has a safe harbor from "play or pay" penalties otherwise known as the $3,000 per employee Employer-Shared-Responsibility penalty.

That's separate than the subsidy qualification rules that state that families are not eligible for a subsidy if either of the parents have a group health plan that is "affordable" in that the employee's portion of the premium for self-only coverage is less than 9.5% of the family's household AGI.

If those subsidy qualification rules had changed, this would be big news, because it would multiply the taxpayer's burden for subsidies and would cause the CBO to recalculate.

Once again, these rules are complex and it's a moving target, so correct me if I'm wrong. But my understanding of the subsidy qualification rules is the same as Somarco's, and to the best of my knowledge there has been no amendment to those subsidy qualification rules.