The Affordable Care Act (ACA) mandate for employers to offer affordable medical coverage to full-time employees was subject to several repeal efforts this year. Since the mandate was not repealed, penalties for noncompliance and the reporting responsibility remain in effect.

Prepare for ACA Form 1095 Reporting

In early December, large employers (50+ employees in prior year) will need to once again gather data to complete their 2017 Forms 1095, which are due to employees by January 31, 2018.

The employer reporting requirement has not changed for 2017 or 2018. However, we remain hopeful that it will be simplified for future reporting years. Bipartisan bills were recently introduced in both the House and the Senate that would make reporting voluntary and less complicated. Even if passed, there would be no changes to this year’s reporting since the new format would not take effect until 2019.

Please contact your Keller account team with any questions regarding your reporting responsibility and if you need assistance with form completion and filing.

ACA Affordability Calculations

To avoid penalties, large employers must offer “affordable” medical coverage to full-time employees. In 2017, the medical plan is affordable as long as the employee contribution for single coverage in the lowest cost plan offered is no more than 9.69% of the employee’s income. In 2018, the affordability percentage is slightly lower, at 9.56% of the employee’s income.

Employers can use one of three safe harbors to report “affordable” offers of medical coverage on the Forms 1095:

  • If the employee contribution in 2017 is no more than $95.93 per month for single coverage in the lowest cost plan, the employer can use the Federal Poverty Level (FPL) safe harbor. For 2018, the employee’s cost must be no more than $96.07 per month. When using the FPL safe harbor, you do not need employee income information and reporting is simplified.
Affordability Percent FPL Affordable Monthly
Employee Contribution
2017 9.69% $11,880 $95.93 (or less)
2018 9.56% $12,060 $96.07 (or less)
  • If the employee’s contribution is higher than the FPL safe harbor amount, then employers can use either the Rate of Pay (recommended) or Form W-2 safe harbor to report affordable offers. For example, under the Rate of Pay safe harbor if the lowest paid full-time employee earns $1,500 per month, the medical plan is affordable for all employees as long as the employee’s contribution for single coverage in the lowest cost plan is no more than $145.35 per month in 2017 ($1,500 x 9.69%) or $143.40 per month in 2018 ($1,500 x 9.56%).

Please contact your Keller account team for assistance determining which affordability safe harbor should be used for your 2017 Form 1095 reporting and if your contribution schedule needs to be adjusted based on the 2018 affordability percentage.