Tighter Margins: IRS Makes It More Difficult to Meet ACA Affordability Safe Harbors in 2024

Matthew P. Chiarello • September 14, 2023

We have reported previously on the importance of understanding the coverage and reporting rules of the Affordable Care Act.  In particular, Code Section 4980H imposes penalties on large employers for failure to offer minimum essential coverage to 95% or more of their full-time employees (and dependents) or to provide affordable, minimum value health insurance.

Whether coverage is “affordable” is determined by reference to the lowest cost, self-only option available under the employer’s health plan.  Applicable guidance provides certain safe harbors with respect to affordability, the amounts of which fluctuate year-to-year due to cost-of-living adjustments and other factors.

The IRS recently published Revenue Procedure 2023-29 , which lowers the affordability threshold from 9.12% in 2023 to 8.39% in 2024.  This means that premiums will likely need to be lower in 2024 to remain affordable.  For instance, employers that rely on the federal poverty line affordability safe harbor may charge an employee premium up to $101.94 in 2024, which represents a decrease from $103.28 in 2023.  Although the dollar amount may appear small, penalties for noncompliance can be significant.

Based on this updated guidance, employers may wish to evaluate their health plans and ensure that their offerings are “affordable” by reference to Code Section 4980H and the corresponding safe harbors.  More information on affordability and ACA compliance can be found in our Employer Shared Responsibility Penalty Checklist for Employers, copies of which are available on request.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
More Posts