Saturday, December 15, 2018
Hey Fletch … Our church requires any employee who uses our health insurance to pay part of the premium. I heard somewhere that there is a maximum that we can charge. Is this so?
DRF—You heard correctly. The Society for Human Resource Management article puts it this way:
For plan years beginning in 2018, employer-sponsored coverage will be considered affordable if an employee’s required contribution for self-only coverage for the least-expensive plan option that meets ACA requirements does not exceed 9.56 percent of the employee’s household income for the year (down from 9.69 percent in 2017).
That was for 2017 and 2018. In a later article by SHRM, “ACA’s Affordability Threshold Rises in 2019: IRS annually caps employees’ share of least-expensive health plan premiums,” they note:
On May 21, the IRS announced in Revenue Procedure 2018-34 the 2019 shared-responsibility affordability percentage. Based on the ACA’s affordability standard as adjusted for inflation, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.86 percent of an employee’s household income, up from 9.56 percent in 2018.
For 2019 calendar-year plans using the federal poverty level (FPL) safe harbor to determine affordability, an employee’s premium payment can’t exceed $99.75 per month, up from $96.08 per month in 2018.
The challenge is determining an employee’s total household income. You can’t easily do this without seeing their tax forms, which would be an invasion of privacy.
For this reason, you can use the safe harbor figures, or 9.86% of your state’s minimum wage. Using the federal minimum wage of $7.25, that would come to $123.91 per month. If you have an employee making $50,000 then it would come to $410.83 per month. If your employee has a working spouse, that minimum number would increase.