ACA 2019 Affordability Standard and Out of Pocket Maximums

On May 21, the IRS announced in Revenue Procedure 2018-34 the 2019 shared-responsibility affordability percentage. Based on the ACA’s affordability standard as adjusted for inflation, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.86 percent of an employee’s household income, up from 9.56 percent in 2018.

For 2019 calendar-year plans using the federal poverty level (FPL) safe harbor to determine affordability, an employee’s premium payment can’t exceed $99.75 per month, up from $96.08 per month in 2018.

The affordability standard is the highest percentage of household income an employee can be required to pay for monthly plan premiums, based on the least-expensive employer-sponsored plan offered that meets the ACA’s minimum essential coverage requirements. Eligible Large Employers need to cautious and ensure that they offer at least one plan that meets this standard.

Non-grandfathered group health plans must comply with an annual limit on cost-sharing, known as an out-of-pocket (OOP) maximum, which is set by the Department of Health and Human Services (HHS). This limit takes into account an employee’s spending under the plan deductible, as well as co-payments and percentage-of-cost co-sharing payments, but not plan premiums.  Last December, HHS announced that for the 2019 plan year, the OOP maximum will be $7,900 for self-only coverage and $15,800 for family coverage. In addition, the self-only is applied to each covered individual, whether the individual is enrolled in self-only coverage or family coverage.

The IRS annually sets a separate and lower OOP maximum exclusively for high-deductible health plans (HDHPs) that can be coupled with health savings accounts (HSAs), known as HSA-qualified HDHPs. The limits for the 2019 HDHPs OOP for self only coverage is $6,750 and $13,500 for family coverage.


Related SHRM Article:
2019 HSA Limits Rise, IRS Says, SHRM online Benefits, May 2018