How do I know if our job-based coverage is considered "affordable"?
December 21, 2013
The employee portion of the monthly premium cannot exceed 9.5% of his or her Modified Adjusted Gross Income. Keep in mind, this only considers the employee's income and what the employee pays toward single coverage only. It does not consider household income or any spouse/partner and children's health insurance costs.
What is considered in the Affordability Testing?
For the Affordability Testing, you'll look at:
1) what the employee pays toward employee-only coverage (not family coverage)
2) the employee's annual income (not the household income).
Originally, the intent of the law was to ask employers to gather income from the employee's entire family and calculate affordability of the family premium, but it was determined that it would be too difficult on the employer and leave too much room for error. So the unintended consequence of this change was that many families who would have qualified for subsidy will not be able to use it because the employee alone will pass the Affordability Test.
How do we handle the testing?
You don't have to because we will. Our experts will determine if your plan is affordable for each employee and compliant with the law. And if it's not, we don't only give you facts; we'll also show you financial strategies on what will save your business the most money.