shared responsibility

A primer on minimum essential coverage

Under the Affordable Care Act (ACA), employers with at least 50 full-time employees or equivalents must offer those workers, as well as their dependents, an opportunity to enroll in minimum essential coverage under an employer-sponsored plan. Without qualifying health care coverage, employees must qualify for an exemption or make an individual shared responsibility payment when filing their tax returns.

An affordability test — a comparison of proposed insurance costs for an employee against the employee’s wages — is helpful in determining the proper level of coverage. An employee’s share of the premium cannot exceed 9.56 percent of household income; if the cost exceeds this threshold, fault will lie with the employer for not providing a minimum essential affordable coverage plan.

According to the U.S. Department of Health and Human Services (HHS), employers may use one of three methods to determine if their health plan meets minimum value requirements. The first is HHS’s minimum value calculator, which lets employers enter benefit information and cost-sharing requirements to assess compliance. The second is to use safe harbor checklists, which compare the employee’s insurance cost against a number of federally determined standard, including an employee’s W-2 wages. Finally, firms can hire an actuary, who can provide certification if minimal value was accomplished.

To learn more about the ramifications of minimum essential coverage, or how to obtain cost-effective insurance solutions, contact a Plexus professional at 847.307.6100.