ICHRA has provided an incredible solution to the large group ACA mandates. With benefitbay®, we have compliance built into to our software so employers can be assured that their contribution strategy fits within federal regulations
Compliance and the Low Silver Plans (LSP)
The cost of the LSP or Lowest Silver Plan is the basis used by the federal government to determine affordability. For 2024 an ICHRA is considered affordable if the monthly premium for the Lowest Cost Silver Plan is equal to or less than 8.39% of an individuals monthly household income. If an employer group with 50 or more employee's is offering ICHRA, they must offer a contribution that is considered affordable (to avoid federal penalties). For this reason, our FULCRUM tool's default benchmark plan is the ICHRA LSP.
Our platform will use the LSP premium and income information provided for each employee in the final census to calculate the minimum ICHRA employer contribution. With this compliance element built into the software, you can quickly and effectively get a quote and build an affordable contribution strategy for your groups.
The LSP premium is based on the employee age and zip code provided on the census
View Affordability
In our modeling tool you'll easily be able to see if you have any percentage of employees who would be considered unaffordable in any of the model's you've created.
This information can be found on the first model page called 'ICHRA Models'. Here you can view the unaffordable percentages all in one place. From there you can open and adjust any models you've created to ensure the proper amount of employees will be offered affordable coverage.
Remember, with ICHRA you can exclude up to 5% of your employee population from the offer of affordable coverage
Additional Affordability Rules
The Family Glitch
There is a term that is thrown around in the ICHRA world called 'The Family Glitch' but what exactly is it? This ACA term refers to how affordability in an employer sponsored health plan were previously determined. Before 2023, affordability was determined based on the cost of an individual employee alone; dependents were not factored into the estimation of affordable coverage. With this issue, millions of families were impacted and were stuck paying high premium costs.
Starting in 2023, the government issued a new rule to address The Family Glitch. Now, families who were paying a higher percentage than 8.39% through an employer sponsored health plan may now be eligible for premium tax credits through the Marketplace.
To learn more about The Family Glitch click here for a helpful article.
Subsidy Eligible?
Under ACA mandates, Large employers groups (50+ employees) have to offer "affordable" coverage to their employees. If an employee is offered an affordable contribution, they cannot accept any kind of tax premium or subsidy. Doing so could result in penalties for both the employee and employer.
For certain small groups offering coverage to their employees, there may be subsidy advantages that can be applied. If you are interested in learning more about subsidy advantages for small groups, please reach out to your Customer Success Manager for more information.