HR Review
September 2023

EB Compliance Update: IRS Releases ACA Affordability Rates for 2024

The Internal Revenue Service (IRS) has just released crucial updates concerning the Affordable Care Act’s (ACA) affordability percentage thresholds for the upcoming plan year that begins on January 1, 2024.

These updates not only impact what employees will contribute to their healthcare plans but may also influence the penalties that employers could face. Here are the key details:

The Shift in Affordability Rates: What Does it Mean?

The affordability percentage for 2024 is set to decrease from the previous year’s rate of 9.12% to a new rate of 8.39%. This change implies that to remain compliant with ACA standards, many employers will need to adjust the portion of healthcare premiums that their employees are responsible for.

The affordability percentage for 2024 is set to decrease from the previous year’s rate of 9.12% to a new rate of 8.39%. This change implies that to remain compliant with ACA standards, many employers will need to adjust the portion of healthcare premiums that their employees are responsible for.

What Does This Mean for Employee Contributions?

The newly updated rates generally mean lower employee contributions. Let’s break it down by pay frequency, using the Federal Poverty Level (FPL) as the affordability rate. In 2023, it was $103.28 per month, but for 2024, it will be $101.94 per month.

• Monthly: The new rate is $101.94, marking a decrease of $1.34 compared to 2023.
• Semi-Monthly: The new rate will be $50.97, which is down by $0.67 from last year.
• Biweekly: Employees will now contribute $47.05, a drop of $0.62.
• Weekly: The contribution goes down to $23.52, a $0.31 decrease.

Employer Safe Harbors: How to Measure Affordability

Employers have a few different methods at their disposal to determine whether their healthcare plans meet the new affordability criteria. These are:

1. Federal Poverty Line (FPL): According to 2024 FPL guidelines, the safe harbor amount for self-only coverage under the lowest-cost plan is $101.94 per month.
2. Rate of Pay:
   • Hourly Employees: Multiply 130 by the employee’s hourly rate and then multiply that by 8.39%.
   • Salaried Employees: Multiply the monthly salary by 8.39%.
3. Form W-2 (Box 1): Contributions should not exceed 8.39% of an employee’s Form W-2 wages.

Specific Scenarios to Consider

Groups that have pegged their contributions to a percentage of gross wages will see the most impact. For those using post-tax withholding methods, the rate will shift from 9.12% down to 8.39%. If pre-tax withholding is in play, the rate will decline from 8.35% to 7.74%.

Calculating Contributions for 2024: How eBen Can Help

For the 2024 plan year, employers need to make sure healthcare is affordable for employees. This is important for two reasons: It’s good for employee morale, and it’s required by law to avoid penalties under the ACA. However, figuring out what “affordable” means can get confusing, especially with recent changes to the affordability percentage.

At eBen, we specialize in assisting employers to navigate these complex compliance landscapes. Our team helps you perform accurate calculations, interpret how the latest IRS guidelines directly impact your specific situation, and develop a strategic approach to employee contributions.

Medicare Open Enrollment: Don’t Miss Out

For those aged 65 and above or qualified due to specific disabilities, Medicare Open Enrollment is another key period for healthcare planning, running from October 15 to December 7, 2023. You can switch plans, update prescription coverage, or add and remove components of your Medicare coverage.

Pro Tips for Navigating Medicare Open Enrollment

Review your current plan details, which are usually sent in an Annual Notice of Change. Use available tools like the Medicare Plan Finder to compare costs and coverages. Don’t hesitate to use free counseling services like the State Health Insurance Assistance Programs (SHIP) if you need more guidance.

Common Mistakes to Avoid

Keep an eye on your mail for critical notifications from your healthcare provider, especially during the enrollment period. Re-evaluate your prescription drug needs to make sure your plan is still cost-effective. And don’t forget, always consider all associated costs, not just the premiums, when choosing or modifying a plan.

Preparation is crucial for making wise decisions during Open Enrollment. So, jot down these key dates and start preparing today for a healthier tomorrow.

To speak with one of our Medicare representatives, please give our team a
call at (828) 765 3499, or fill out our online contact form here.

DATE CHANGE: Extended Special Enrollment Period for Those Losing Medicaid Coverage

The Department of Labor, Health & Human Services, and the Treasury have extended the special enrollment period for those losing Medicaid coverage. Originally set to end on September 30, 2023, this period has now been extended to December 31, 2023, due to concerns that Medicaid termination notices may not have reached everyone affected.

What You Need to Do:

If an employee informs you they’re losing Medicaid coverage, we recommend that you contact your agent or account manager for assistance.

Beyond One-Size-Fits-All: Customized Benefits for Every Generation

In today’s diverse work environment, crafting an employee benefits package that serves multiple generations can be challenging but also rewarding. From Baby Boomers to Gen Z, each group has unique expectations and needs when it comes to work-life balance, health benefits, and career growth. Our latest article provides a roadmap for navigating this complexity, offering tips for a more inclusive, flexible, and well-communicated benefits strategy.

We discuss the importance of involving employees in the design process, the need for a flexible and adaptable benefits offering, and how clear, transparent communication can make all the difference in employee satisfaction. If you’re looking to enhance your current benefits package or build a new one that caters to a multi-generational workforce, our article is a must-read. Discover how you can better meet the needs of all your employees, ensuring a happier, more engaged team.

Elevating Your Benefits: eBen and orchestrateHR Join the Risk Strategies Family

We are excited to announce that eBen and orchestrateHR have joined Risk Strategies, the 9th largest privately held insurance broker in the U.S., with over 30 specialty practices. eBen will bring new strength to its National Employee Benefits Practice, and their expertise, tools, and resources are a perfect match for how we partner with employers and their employees. 

We want you to know that this collaboration brings added value to you; our own excellent team PLUS an even larger national “bench” with which we can collaborate and share resources to assist our clients.

For you, the good news is:

• Our consultants, service teams, and leadership will not change.
• Our office locations will remain at current locations throughout the U.S.
• We will have even greater resources to provide service and support to our clients. Local service – national scope.
• Our company name remains the same, but we’ll gradually update our materials and website to reflect our affiliation Risk Strategies.

At eBen and orchestrateHR, we remain committed to keeping you informed about our services and providing timely information on benefits and first-in-class compliance guidance. We look forward to continuing our relationship with you and providing valuable updates to help you make the most of your benefits management.