What clients need to know about the 2019 FPL affordability safe harbor
Earlier this month, the Department of Health and Human Services released the 2019 federal poverty level thresholds. The 2019 single FPL threshold is especially important for employers using the “easy button” Affordable Care Act employer shared responsibility FPL affordability safe harbor. As a reminder, the three affordability safe harbors are FPL, Form W-2 and rate of pay. The HHS memo is specific to the FPL safe harbor.
The single FPL threshold for 2019 indexed up to $12,490 from $12,140. And, as previously announced, the 2019 affordability standard indexed up to 9.86% from 9.56%. Thus, the new 2019 FPL affordability math is $12,490 ÷ 12 months x 9.86% = $102.62 per month. Prudent employers will naturally round down to $102.
What this means is that employers that charge $102 or less per month for single coverage in their lowest cost health plan will generally meet the FPL affordability standard for 2019. This $102 is up from around $96 for 2018.
Of course, many employers — including those with calendar year plans — locked in their 2019 plan year employee contributions well ahead of this month’s announcement. Because of this timing issue, the Treasury allows employers to use the poverty guidelines in effect six months prior to the beginning of the plan year.
Thus, an employer with a Jan. 1 plan year, for example, that is using the FPL safe harbor for 2019, used this math last autumn — $12,140 (this is the 2018 FPL) ÷ 12 months x 9.86% = $99.75 per month, rounded down to $99 per month or so. For these employers, no further action is needed.
Meanwhile, if some time ago your organization selected the more mathematically cumbersome Form W-2 or rate of pay safe harbor because you could not afford the FPL safe harbor, 2019 is a good time to revisit that decision. Back in 2015, the FPL safe harbor was around $93. It is now up about 10% from those original levels.