As an ALE, it is required that minimum value, essential, and affordable coverage is offered to all full-time employees, or the employer pays penalties to the IRS. To be deemed “affordable” in 2020, the standard is that the employee pays no more than 9.78% of their household income on medical premium (the percentage for 2021 was just announced to be 9.83%). Since household income can be difficult to determine, there are a few different safe harbors employers can use to ensure they meet the requirements:
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The W-2 wages for the year
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The rate of pay
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The federal poverty level (FPL)
Pay reductions, furloughs and unpaid leaves of absence due to COVID-19 can all affect the W-2 and rate of pay safe harbor calculations employers are frequently using to complete their 1095 forms. For a more detailed look at how to calculate affordability with each safe harbor and the potential implications of furloughs on each, please see this white paper. You can also reach out to your Fall River Client Manager with questions.
