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Thursday, 16 July 2020 10:09

Affordability for ALEs Impacted by COVID-19

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COVID-19 has thrown a wrench in many aspects of our professional lives, but Affordability safe harbors for Applicable Large Employers (ALEs) might not be the first to enter our minds.

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: 

  • The W-2 wages for the year

  • The rate of pay

  • 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.

Read 20 times Last modified on Wednesday, 29 July 2020 10:15
Amy De Lorenzo

Amy Johnston is an Account Manager with extensive experience working with both large and small employers as a broker.  In addition to five years of broker experience prior to joining Fall River, she also brings eight years of insurance carrier expertise.  Amy is an expert on ERISA, the Affordable Care Act, and other compliance issues.

Ms. Johnston received a Bachelor of Arts degree in Communications from Colorado State University. She is a Colorado native from Steamboat Springs, and loves spending time in the mountains with her husband, two children, and Tucker the cocker spaniel. She enjoys snowshoeing, hiking, and philanthropy work to promote education.