Analysts at ADP are looking at a Patient Protection and Affordable Care Act (PPACA) implementation question that hasn’t gotten much attention: The details involved with how employers will try to meet the PPACA coverage affordability requirements.
PPACA is set to require “affected large employers” to offer affordable coverage with a minimum value or else face the possibility of having to pay large “shared responsibility” penalties.
The Internal Revenue Service (IRS) has come up with several different safe harbor rules employers can use to show that their coverage is affordable without having to file extra paperwork.
An employer can show that a worker’s share of the premiums is less than or equal to 9.5 percent of what the employer put in Box 1 of IRS Form W-2.
An employer can show that a worker’s share of the premiums is less than or equal to 9.5 percent of the Federal Poverty Level (FPL).
An employer can show that a worker’s share of the premiums is less than or equal to 9.5 percent of the worker’s monthly rate of pay.
ADP defines a midsize employer as one with 50 to 999 employees, and a large employer as an employer with 1,000 or more employees.
When ADP polled 800 benefits and human resources specialists and midsized employers and large employers, they found that 44 percent of the survey participants at midsize employers and 38 percent of the participants at large employers admitted that they still aren’t sure which approach their companies will use.
About 31 percent of the participants at large employers and 23 percent of the participants at midsize employers said they’ll use the monthly-rate-of-pay approach.