Large employers may be subject to the employer penalty under the Affordable Care Act if they do not offer affordable, minimum value coverage to all full-time employees and at least one full-time employee receives a subsidy in the Exchange. The Federal Poverty Line (“FPL”) is relevant to this penalty in two ways:
1. Affordability Safe Harbor: For affordability purposes, a large employer satisfies the FPL safe harbor with respect to
an employee for a calendar month if the employee’s required contribution for the large employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.5% (as indexed) of a monthly amount determined as the FPL for a single individual for the applicable calendar year, divided by 12.
2. Subsidy Eligibility: An individual is only eligible for a subsidy in the Exchange if he or she is within 100-400% of the FPL and is not offered affordable, minimum value group coverage.
Indexed Amounts
The following are the 2016 HHS poverty guidelines:
|
2016 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA |
|
|
Persons in family/household |
Poverty guideline |
|
1 |
$11,880 |
|
2 |
$16,020 |
|
3 |
$20,160 |
|
4 |
$24,300 |
|
5 |
$28,440 |
|
6 |
$32,580 |
|
7 |
$36,730 |
|
8 |
$40,890 |
|
For families/households with more than 8 persons, add $4,160 for each additional person. |
|
|
2016 POVERTY GUIDELINES FOR ALASKA |
|
|
Persons in family/household |
Poverty guideline |
|
1 |
$14,840 |
|
2 |
$20,020 |
|
3 |
$25,200 |
|
4 |
$30,380 |
|
5 |
$35,560 |
|
6 |
$40,740 |
|
7 |
$45,920 |
|
8 |
$51,120 |
|
For families/households with more than 8 persons, add $5,200 for each additional person. |
|
|
2016 POVERTY GUIDELINES FOR HAWAII |
|
|
Persons in family/household |
Poverty guideline |
|
1 |
$13,670 |
|
2 |
$18,430 |
|
3 |
$23,190 |
|
4 |
$27,950 |
|
5 |
$32,710 |
|
6 |
$37,470 |
|
7 |
$42,230 |
|
8 |
$47,010 |
|
For families/households with more than 8 persons, add $4,780 for each additional person. |
|
Affordability Safe Harbor and Subsidy Eligibility 2016 Results
So as to provide employers with adequate time to establish premium amounts in advance of the plan’s open enrollment period, a plan can use any of the poverty guidelines in effect within 6 months before the first day of the plan year. These new thresholds were announced in January 2016.
Based on 2016 levels:
- For affordability safe harbor purposes, the applicable FPL is the FPL for the state in which the employee is employed. The FPL is $11,880 for a single individual for every state (and Washington D.C.) except Alaska3 or Hawaii. So, if the employee’s required contribution for the calendar month for the lowest cost self-only coverage that provides minimum value is $95.63 (9.66% of $11,880/12) or less, the employer meets the FPL safe harbor.
- For subsidy eligibility purposes, the applicable FPL is the FPL for the state in which the employee resides. 100 – 400% of the FPL is $11,880 – $47,520 for a single individual and $24,300 – $97,200 for a family of four for every state (and Washington D.C.), except Alaska or Hawaii.
