The two key percentages you need to know to avoid free-rider penalties under the Affordable Care Act (ACA) health care reform law are 60% and 9.5%.
Your health plan must offer minimum value by picking up at least 40% of the cost (i.e., full-time employees can’t pay more than 60% out-of-pocket) and be affordable (i.e., employees’ premiums can’t exceed 9.5% of their household income).
Proposed regulations from the IRS provide methods for calculating minimum value, including how wellness discounts figure into minimum value and affordability. These regs are proposed to apply for tax years ending after Dec. 31, 2013, but you may apply them for tax years ending before Jan. 1, 2015. (78 F.R. 25909, 5-3-13)
To determine whether your plan meets the 60% mark, these proposed regs adopt final regulations issued by the Department of Health and Human Services (HHS). Under the HHS’ regs, employees cost-sharing (e.g., co-pays)...(register to read more)