New Cost-Sharing Limits Set for ACA-Compliant Plans

The Department of Health and Human Services has released the 2020 cost-sharing limits for non-grandfathered plans that comply with the Affordable Care Act.

HHS is charged with setting the premium adjustment percentage, and it changed the formula for calculating cost-sharing limits this year. The agency says this will result in a higher maximum annual limitation on cost-sharing – and possibly higher employer shared responsibility penalties. The latter amounts have to be approved by the IRS.

The final 2020 maximum cost-sharing values are:

  • $8,150 for self-only coverage, up from $7,900 this year, and
  • $16,300 for other than self-only coverage, up from $15,800 this year.

Penalties

As you will know, the ACA also includes a provision called the “Employer Shared Responsibility” penalty, which is levied on applicable large employers who fail to offer coverage to a sufficient amount of their workers or fail to offer coverage that does not provide minimum value or is not affordable, as per ACA regulations.

The penalties proposed for 2020 are as follows:

  • $2,570 per full-time employee (minus the first 30) for failing to offer coverage to a sufficient number of full-time employees.
  • $3,860 per full time employee if the employer offers coverage to a sufficient number of full-time employees, but the coverage either doesn’t provide minimum value or is not affordable.

The latter penalty only applies to full-time employees who have received a premium tax credit for health insurance they have purchased on a government-run health insurance exchange.

Please note that these amounts have not yet been finalized. The IRS must approve the new penalty levels before they take effect.

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