The U.S. Department of Health and Human Services (HHS) annually updates Federal Poverty Levels (FPLs) to determine eligibility for various programs. In 2024, the FPL for an individual increased to $15,060, affecting applicable large employers (ALEs) under the Affordable Care Act’s (ACA) pay-or-play rules.
Key Points:
- FPL Impact on Affordability: ALEs can use FPLs to assess health plan affordability through the FPL safe harbor or determine eligibility for premium tax credits.
- Pay-or-Play Penalties: ALEs face penalties only if their full-time employees receive premium tax credits for Marketplace insurance. Affordable, minimum-value employer coverage prevents employees from qualifying for these credits.
- Avoiding Penalties: To avoid pay-or-play penalties, ALEs should ensure their health coverage remains affordable. FPL safe harbor users must apply guidelines within six months before the plan year, with calendar-year plans using 2023 FPLs for the 2024 plan year.
- Affordability Percentage Change: For 2024, the affordability percentage is 8.39%, down from 9.12% in 2023. The FPL safe harbor aids ALEs by providing a predetermined maximum employee contribution, simplifying the affordability assessment.
- Calculating Affordability: Using the FPL safe harbor for 2024, ALEs with calendar-year plans apply the 2023 FPL to determine affordability for 2024. Non-calendar-year plans may use the 2024 FPL guidelines, with the maximum employee contribution set at $105.29.
- Navigating the complexities of FPLs and the ACA’s pay-or-play rules is crucial for employers in 2024.
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