2024 Federal Poverty Levels: Navigating the Impact on Employer Liability

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.