Skip to main content
Menu File a Claim Login
American-Fidelity-logo
Menu
Menu File a Claim Login
American-Fidelity-logo
American Fidelity Logo American Fidelity Logo
  1. Strategy
      •  
      • Employee Benefits
      • Communication and Education
      • Enrollment and Admin
      • HR Assistance
      • Tax Savings
      • Compliance Updates
      •  
  2. Products
      •  
      • Benefits
      • Dependent Verification
      • HR Technology
      • Reimbursement Accounts
      • Retirement Savings
      • Section 125
      •  
  3. Why Us
      •  
      • For Education
      • For the Public Sector
      • For Automotive
      • Account Managers
      • Customer Testimonials
      •  
  4. Blog
      •  
      • Benefits Strategy
      • Reimbursement Accounts
      • Supplemental Benefits
      • Customer Stories
      • Compliance Updates
      •  
  5. Support
      •  
      • COVID-19
      • Employer Assistance
      • Videos
      • Contact Us
      •  
  6. Claims
      •  
      •  
Login
 
 
American Fidelity Logo

New ACA affordability may increase financial burden

 

August 17, 2022

2 minute read

Category: Compliance Updates

reviewing documents

For medical plan years beginning in 2023, the Internal Revenue Service (IRS) recently announced a significant decrease in the affordability percentage to 9.12%, from the previous level of 9.61%. This could trigger penalties for large employers who fail to adjust to meet this new threshold.

How to Avoid Costly Mistakes

  1. Group medical plans have hit employers with more expensive rates. Medical rates going up with IRS affordability percentages going down means you may need to absorb more unexpected premium increases rather than pass them on to employees, if you are committed to maintaining an “affordable” plan option under ACA rules.
  2. You could be at increased risk for an Employer Shared Responsibility Penalty. Take the time to re-evaluate premium contribution structures if your goal is to ensure affordability. Understand that you may be impacted even if your medical rates stayed the same. Penalty risk depends on the affordability safe harbor you’ve chosen to use when reporting to the IRS. For example, to qualify to use the Federal Poverty Line safe harbor, the employee share of the monthly premium for the lowest cost plan, single coverage must be $103.28 or lower.
  3. The IRS has revoked the ”good faith” effort relief they offered in the past. You should be prepared to defend the accuracy of the offer of coverage and safe harbor codes your report to the IRS on Form 1095-C.
  4. Partner with an expert you can trust to help you evaluate your risk and ensure you are doing everything possible to avoid potential penalties.
 

This blog is up to date as of August 2022 and has not been updated for changes in the law, administration or current events.

 
  • Tags:
  • ACA
  • Compliance

Share:

 

Related ACA Articles

 
Compliance Updates

PCORI Fee Increase

3 minute read

June 23, 2022

The IRS has increased the amount of the annual PCORI fee you may be required to pay as part of your ACA compliance. This fee is due August 1, 2022.

  • Tags:
  • ACA
  • Compliance
Compliance Updates

“Family glitch” regulations pose new challenges for employers, employees

3 minute read

May 05, 2022

Catch up on the new proposed "family glitch" regulations.

  • Tags:
  • ACA
  • Compliance
Compliance Updates

Proposed ACA Health Coverage Reporting Relief

3 minute read

December 07, 2021

New proposed rules give employers more time to distribute Affordable Care Act (ACA) forms, but no more “good faith” relief for reporting errors.

  • Tags:
  • ACA
  • Compliance
 

This information provided by American Fidelity Administrative Services is intended to be educational. It is general in nature and should not be considered financial, legal or tax advice. Consult an attorney or a tax professional regarding your specific situation.

ESB-8414-0822 

American Fidelity Assurance Company
americanfidelity.com

https://americanfidelity.com/blog/compliance/aca-affordability-financial-burden/

Site Map

About Us

News Center

Careers

Contact Us

© 2022 American Fidelity Assurance Company

  • Privacy Notices |
  • Report Fraud |
  • Terms of Service |
  • Licensing |
  • Special Notices |
  • Cameron Enterprises

This information provided by American Fidelity Administrative Services is intended to be educational. It is general in nature and should not be considered financial, legal or tax advice. Consult an attorney or a tax professional regarding your specific situation.

ESB-8414-0822 

  • File a Claim
    Login
  • Home
  • Benefits Strategy
    • Employee Benefits
    • Communication and Education
    • Enrollment and Admin
    • HR Assistance
    • Tax Savings
    • Compliance Updates
  • Products
    • Benefits
    • Dependent Verification
    • HR Technology
    • Reimbursement Accounts
    • Retirement Savings
    • Section 125
  • Why Us
    • For Education
    • For the Public Sector
    • For Automotive
    • Account Managers
    • Customer Testimonials
  • Blog
    • Benefits Strategy
    • Reimbursement Accounts
    • Supplemental Benefits
    • Customer Stories
    • Compliance Updates
  • Support
    • COVID-19
    • Employer Assistance
    • Videos
    • Contact Us
  • Claims
  • Careers
    • Corporate Careers
    • Sales Careers
  • About Us
  • Site Map

Popular Topics:
  • Register for an Account
  • Forms
  • Unused FSA Funds
  • HCFSA Eligible Expenses
  • Carryovers, grace periods and runoff periods
  • HSA Eligible Expenses
  • HSA Tax Forms
  • Disability Tax Forms