Most public employers use the Federal Poverty Level Safe Harbor, but there are three to choose from.  All three are subject to additional and (somewhat) complex rules.  The affordability safe harbors are described below.

B-1. Federal Poverty Level Safe Harbor. Coverage is deemed to be affordable if the cost of single coverage does not exceed 9.5% (as indexed) of the federal poverty line for a household of one.

Coverage is deemed to be affordable if the cost of single coverage does not exceed 9.5% (as indexed) of the federal poverty line for a household of one.

ALEs are employers who have 50 or more full-time employees (including mythical full-time “equivalent” employees) in the previous year. An ALE may also be a group of employers under common control (an “Aggregated ALE Group”), which taken together have 50 or more full-time and full-time equivalent employees.  In that case each employer under common control is an “ALE Member.”  Each separate ALE Member is treated as an applicable large employer even if they don’t have 50 or more full-time employees and full-time equivalent employee.  Each ALE member also has a separate obligation to offer coverage to their full-time employees and dependents, and to file Forms 1094-C and 1095-C. 

Applicable large employers must offer health insurance coverage that provides minimum essential coverage (MEC) to both full-time employees and at least non-spouse dependents. MEC is essentially any employer-sponsored health plan that does not consist solely of excepted benefits (such as dental or vision coverage), and that provides no-cost-sharing preventive services required by the ACA.[1]  Persons who have MEC are ineligible for premium tax credits and cost-sharing reductions through MNSure and other state or federal health care exchanges.  To the extent that MEC covers one or more of the ten essential health benefits (“EHBs”), they may not be subject to lifetime or annual limits.

Private employers are subject to ERISA.[2]  ERISA preempts state law.  As a result, they can get away with relatively “skinny” plan designs that still meet MEC.  Cities, counties, and school districts are not subject to ERISA.[3]  They must comply with state benefit mandates.  An MEC plan for a Minnesota public employer must provide comprehensive coverage, including all ten EHBs to the extent mandated by state law.  Retiree health reimbursement arrangements (HRAs, including certain VEBAs) do not have to comply with these requirements, but they still constitute MEC.[4] This means that retirees with HRAs and VEBA accounts are not eligible for premium tax credits through MNSure unless they opt out of such coverage (we’ll talk about this in more detail later).

Each year, employers must report information to employees and the IRS using the IRS Form 1094 and 1095 series. The forms are different for small versus applicable large employers.

That’s it for now!  These are the key definitions that will carry you through this module, but there are more to follow.  You will have to learn some new words and acronyms on the way,  but we will walk you through these requirements step-by-step. Think of it as learning a new language. You can’t order a drink in ACA, but you’ll soon be speaking ACA with your fellow human resource and payroll friends.  Keep in mind that the ACA was written in English.  Our goal is to use plain English whenever humanly possible.