Andrew Spikes, CPA
The Affordable Care Act (ACA) has been in full effect now for over a year. As we head into 2017, there are some important reminders to keep in mind and also some best practices we’ve learned over the past year.
Affordability Safe Harbor Percentage Increase in 2017
In 2017, the safe harbor for determining the affordability of employer-provided insurance coverage under the Affordable Care Act will increase to 9.69 percent. The safe harbor percentage will continue to be indexed for inflation each year.
Updated Language for Health Insurance Acknowledgment Form
We have seen numerous Insurance Marketplace notices involving employees who previously declined affordable health insurance offered by their employer that met the minimum value requirements of the ACA and then proceeded to apply for health insurance on the Exchange with a premium tax credit. Employers are encouraged to retain documented proof of offer declinations (click here to see a sample waiver of coverage form).
In an effort to have clear records substantiating an offer of affordable health care that meets minimum value, we suggest updating your employee Health Insurance Acknowledgment form with the following or similar language:
“I also acknowledge that my employer has offered me a qualified employer-sponsored health insurance plan the meets the affordability and minimum value requirements of the Affordable Care Act. I also understand that, under the Affordable Care Act, if I decline an offer of employer-sponsored health insurance that meets the affordability and minimum value requirements, I am waiving my entitlement to claim an Advanced Premium Tax Credit (subsidy) when I purchase health insurance on the Exchange.”
If your company is using a contribution strategy, include that information in the statement. For example, if you are using the safe harbor based on Form W-2 contribution strategy, you might include this statement on the employee Health Insurance Acknowledgement form:
“I also acknowledge that my employer has offered me a qualified, affordable employer-sponsored health insurance plan that meets Minimum Essential Coverage and Minimum Value requirements of the Affordable Care Act and has agreed to pay the difference between the cost of single coverage and 9.69% of my Box 1 W-2 wages for 2017.”
Health Care-Related Documents Needed for Payroll Compliance
If Mize Houser prepares your company’s payroll, we need several items to ensure compliance with Affordable Care Act information reporting. Please provide Mize Houser with:
- A copy of your company’s Adoption Agreement with its health insurance provider
- Documentation (a screenshot is fine) of the Contribution Strategy you are using for the upcoming open enrollment. The most common Contribution Strategies are percentage, flat dollar, safe harbor method based on Form W-2, safe harbor method based on rate of pay, and safe harbor method based on federal poverty level.
- If you offer Mercer insurance, you can print the webpage screen after you enter your Contribution Strategy on the Adoption Agreement website.
- Insurance premium rate chart
Measurement Period End Dates
We remind you that the standard administrative period cannot be greater than 90 days, thus your measurement period will not end until the first pay period ending October 2nd or after. Given the timing of your first pay period end date in October you may be delayed several weeks before you will be able to determine who is eligible for insurance.