The long-term future of the Affordable Care Act (ACA) may be uncertain with changes coming in January at the White House and in Congress, but there are things brokers need to know about that will impact your clients in 2017.
Below are some important changes to keep in mind
Employee Offer of Coverage/Maximum Contribution
For the 2017 plan year, the Internal Revenue Service says health coverage will be considered “affordable” if the employee’s required contribution for self-only coverage does not exceed 9.69 percent of the employee’s household income, rate of pay, or W-2 Box 1 income for the year. This percentage applies for purposes of the employer “pay or play” rules as well as the employee’s premium tax credit eligibility (if he or she purchases coverage through the federal or state exchanges).
Deductible and Out-of-Pocket Maximum for ACA-Compliant Plans
The 2017 deductible and out-of-pocket maximums are $7,150 for self-only coverage and $14,300 for family coverage. Both amounts are up from 2016.
HDHP Out-of-Pocket Maximum
There are no changes for 2017 in the High Deductible Health Plan (HDHP) out-of-pocket maximum amounts that include deductibles, co-payments, and related amounts (not premiums). The self-only maximum is $6,550 for employees and $13,100 for a family.
HSA Contribution Limits
The Health Savings Account contribution limit is going up slightly for individuals, but not for families, in 2017. The self-only contribution limit is $3,400 – up $50 from 2016. The family contribution limit is $6,750 for 2017 – the same as 2016. The HSA catch-up contribution limit (for those age 55 or older) is $1,000.
Employer contributions to HSAs are not taxable to the employee. Employee contributions can be made with pre-tax dollars through a Section 125 salary-reduction cafeteria plan.
Some of your clients may offer an “employee plus one” tier (for an eligible employee and dependent children) in addition to a self-only and family coverage tier. The dollar limit would be the same as the HSA family coverage.
HSAs must be linked to an HDHP, which must have an individual deductible of $1,300 or higher and a family deductible of $2,600 or more, according to the Society for Human Resource Management (SHRM).
HSAs cannot be used to pay health plan premiums, except for qualify Long Term Care Insurance, health insurance while receiving federal or state unemployment compensation, COBRA plans, and Medicare premiums.
Health Reimbursement Arrangements (HRAs)
An HRA is often coupled with an HDHP; however, there’s no requirement for the connection. There are no government-set maximum limits for plans linked to an HRA. The employer typically sets the funding limits.
HRAs can sometimes be used to reimburse health insurance premiums, although nonintegrated HRAs cannot be used to pay for individual policy premiums on a pretax basis when coverage is secured through a public health insurance exchange.
Flexible Spending Accounts (FSAs)
In 2017, the Health FSA limit is $2,600 – up $50 from 2016. The Dependent Care FSA limit is the same in 2017 as 2016: $5,000 per household.
ACA Employer Mandate Penalties
Under the Shared Responsibility Provisions of the ACA, Applicable Large Employers (ALEs) are subject to an increased penalty in 2017 (payable in 2018) if they fail to comply with the requirement to offer affordable minimum essential coverage and minimum value coverage.
Penalty A [under Internal Revenue Code Section 4980H (a)] applies if there is no offer of minimum essential coverage. Penalty B [under sub-section (b)] applies if coverage is not affordable or does not provide minimum value. Both penalties are triggered by a full-time employee getting a premium tax credit from a public exchange. The penalty ranges from $2,260 to $3,390 per employee, but only one penalty will apply to a group. Visit the Word & Brown Health Reform Resource Center for more information.
Be sure you’re up to date, so you can help your clients stay in compliance and avoid fines for failing to adhere to any 2017 health insurance laws or other benefit changes. Stay tuned to our Newsroom for more updates throughout the year.
