What to Know About The Affordable Care Act Come Open Enrollment

The Inflation Reduction Act Made it Clear That Employers Must Comply with The Affordable Care Act.

The Inflation Reduction Act:

Over the next 3 years, the IRS is set to hire over 20,000 new agents. As a result of the Biden administration’s Inflation Reduction Act which gives the IRS over $80 billion in additional funding. This investment into the IRS is aimed to improve tax enforcement and customer service. Which means that employers who fail to comply with tax laws are at an increased risk of being fined by the IRS.

A Brief History of the Affordable Care Act:

The Patient Protection & Affordable Care Act (ACA) is a comprehensive health care reform law enacted in March 2010 under the Obama administration. The law was passed in hopes of achieving the following 3 goals:

• Make affordable health insurance available to more people
• Expand the Medicaid program to cover all adults with income below 138% of the FPL
• Support innovative medical care delivery methods designed to lower the costs of health care.

What’s Changed About The Affordable Care Act in 2024?

Affordability Rate Percentage Decreases

The Affordable Care Act is a living document, meaning that their are aspects that are subject to change which employers must be aware of. The IRS announced that for 2024, that the ACAs affordability percentage decreased from 9.12% in 2023 to 8.39% in 2024 of the employee’s household income. This change will make it harder to use the federal poverty level safe harbor. It will also affect the rate of pay and Form W-2 safe harbor calculations. This means that some employees who qualified for the safe harbor in 2023 may no longer qualify.

Amplified ACA Subsidies

Additionally, the eligibility for employees to receive a premium tax credit was increased, putting employers at a greater risk of being fined.

• Individuals with incomes of up to 150% of the Federal Poverty Level (FPL) can obtain coverage for free.
• Individuals that have incomes between 150% - 400% of the FPL have phased relief
• Individuals with an income of 400%+ FPL cannot pay more for coverage than 8.39% of their household income

American Rescue Plan - AKA the Covid Stimulus Package

As a result of the American Rescue Plan (Covid Stimulus), Americans have been more incentivized to obtain marketplace coverage. Since 2021, a record 35+ million US citizens obtained insurance coverage through the marketplace.

What Threat Do the 2024 ACA Changes Pose to Employers?

Looking at the post-covid landscape of 2024, it’s apparent the US government has placed an emphasis on ensuring that citizens have increased access to health care. A step in the direction for improving overall public health. However, these changes do expose employers to increased risk when it comes to being fined by the IRS.

1. More of the population is eligible to receive a premium tax credit for marketplace coverage.
2. Therefore, more people are enrolling into marketplace insurance place.
3. Resulting in employers seeing increased IRS fines for failing to offer an ACA compliant plan.