Understanding What Qualifies Coverage As Affordable

The Affordable Care Act (ACA) has changed the face of healthcare in the United States in an effort to make securing health insurance affordable for every American. What, exactly, qualifies as affordable coverage? It cannot just be a vague idea, as the government now requires all businesses that employ a certain number of people to offer affordable coverage to their employees. So how, then, is affordability defined?

According to ACA standards, a plan is considered affordable if it costs 9.5 percent or less of the individual it covers income. As an employer, how can you know if your plan will be affordable for your employees? There are a few safe harbors you can use to avoid being hit with penalty fees.

First, you can reference Box 1 on your employee’s W-2, where he or she will have to report his or her taxable income. Secondly, you can base affordability off your employee’s rate of pay on the first day of coverage under that plan. And finally, you can rest easy knowing your plan is affordable if your employee’s paid share is not more than 9.56 of the federal poverty level for a single individual. These safe harbors enable you to protect your employees by ensuring they are able to afford the protection they need, and protect your business from penalty fees.

Do not be left wondering if the plans you offer as a business or the plan you secure as an individual will be complaint with ACA regulations, only to be hit with tax penalties in April. To have a certified agent come alongside you to help you navigate the changing face of health care, contact Bernardini & Donovan Insurance Services today. Located in Redlands, we are here to help you secure the best protection for you and your family. To get the health insurance you deserve this year, call us today!