Employers: Terms to Know about Health Coverage

Under the Affordable Care Act, certain employers–known as applicable large employers (ALEs)–are subject to the employer shared responsibility provisions. Whether you are an ALE or not, now is the time to firm up plans for health insurance coverage for your employees for 2017.

If you are an ALE, you may choose to either offer affordable minimum essential coverage that provides minimum value to your full-time employees and their dependents or risk owing the IRS an employer shared responsibility penalty.

Here are definitions of key terms related to health coverage you might offer to employees:

Affordable coverage: If the lowest cost self-only only health plan is 9.66 percent (in 2016, adjusted annually) or less of your full-time employee’s household income, then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to you as the employer.

Minimum essential coverage: For purposes of reporting by ALEs, minimum essential coverage means coverage under an employer-sponsored plan. Dental and vision coverage are outside the scope of minimum essential coverage.

Minimum value coverage: An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.

Help is just a phone call away. Don’t hesitate to call us, if you have any questions or need more information about the employer shared responsibility provisions.