Amwins Connect - February 2024 Question of the Month

Amwins Connect – February 2024 Question of the Month

Question

How does an ALE (Applicable Large Employer) pick an affordability safe harbor?

Answer

If an ALE's offer of minimum value coverage meets any one of three affordability safe harbors, the employer avoids potential penalties under §4980H(b). The following are the three available affordability safe harbors:

• FPL (Federal Poverty Level),
• Rate of Pay, and
• Form W-2.

When determining which affordability safe harbor to use, employers should first consider the FPL safe harbor because it is the simplest and guarantees affordability for all employees. If the monthly employee contribution for single coverage does not meet the FPL safe harbor, then the employer should consider the rate of pay or Form W-2 safe harbor.

See more detail in our ACA Employer Reporting FAQ (Q4).

More detail is also available in our summary on Affordability Considerations.

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