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2023 ACA Compliance & What You Need to Know

When the Affordable Care Act was enacted in 2010, group health plan coverage changed dramatically. The act changed how people had access to healthcare in the U.S. and also put new requirements on businesses that employ workers.

In the years since, various changes have been made that affect what employers have to do regarding the healthcare coverage they offer employees. In 2023, new changes are taking effect that all employers need to know. To help you stay ahead of the game, here’s an overview of how to get ACA compliant in 2023.

What Changed for 2023?

Four main areas changed in the ACA for 2023. Let’s break each down by category below.

#1 Cost Sharing

The ACA has set new limits on cost sharing for essential health benefits, or EHBs. The out-of-pocket limit for all EHBs can’t be more than $9,100 for coverage that includes just the insured or not more than $18,2000 for a family’s coverage.

#2 Health FSA Contribution Limits

If your plan offers a health FSA, the dollar limit on employee salary reduction contributions can’t exceed $3,050. Employers are allowed to set their own limits on how much employees can contribute pre-tax to the FSA as long as that amount doesn’t exceed the maximum limit set by the ACA.

If your health FSA allows for carryovers of unused funds from the year prior, ensure that the limit isn’t more than $610, which will go into effect in 2024.

#3 Affordability Percentages

All healthcare plans under the ACA must be considered affordable. The act defines “affordable” if employees contribute less than 9.12% of their household income for that taxable year. For the purposes of this calculation, the percentage will only apply to the premiums for the primary insured and not the rest of the family.

The adjusted percentage of 9.12% is the most significant decrease since this rule was first implemented. Remember that if your company offers multiple healthcare plans, this affordability test will only apply to the lowest-cost plan for employees.

#4 Dollar Amounts for Penalties

There are two types of penalties employers may face under the ACA.

First, an employer may face a penalty under Section 4980H(a) if they don’t offer healthcare coverage to “substantially all” of their full-time employees and dependents and if any of their full-time employees receives an exchange subsidy.

In 2023, this monthly penalty will equal the company’s total number of full-time employees minus 30 and multiplied by one-12th of $2,880 for any month it applies. So, for example, if a company has 100 full-time employees, the penalty would be $16,800.

Second, an employer can face a penalty under Section 4980H(b) even if they offer coverage to “substantially all” of their full-time employees—even if one employee receives an exchange subsidy because the coverage remains unaffordable. Still, this doesn’t provide minimum value if the coverage isn’t available to every full-time employee.

In 2023, this monthly penalty will be assessed for each employee who receives an exchange subsidy. It will be in the amount of one-12th of $4,320. That being said, this second penalty amount can’t exceed the first penalty amount.

What Employers Must Do for Employees Regarding Changes

In addition to ensuring they are up-to-date with all ACA compliance, employers need to ensure that all of their healthcare plan documents reflect recent changes. The summary of benefits and coverage, or SBC, for example, must include any new limits for the plan. Beyond updating the documents, employers must communicate the changes to their employees before enrollment.

Tax Reporting Requirements for 2023

The IRS also sets reporting deadlines under Sections 6055 and 6056 that employers need to meet.

By February 28, all paper returns for 2022 must be filed. Two days later, on March 2, employers must furnish individual statements for the 2022 tax date. And by the end of March, all electronic returns must be filed with the IRS for the 2022 tax year.

Other Things Employers Should Note

The ACA imposes many other requirements on employers regarding their employees’ healthcare coverage. The above are just four significant changes to the ACA starting in 2023.

As you can see from the above, failure to comply with even one part of the ACA can result in hefty monthly penalties. In addition, all companies should review their healthcare coverage offerings with an experienced healthcare broker and/or agency.

Beckham Insurance Group Has You Covered

We hope you enjoyed this blog on ACA compliance for 2023! Remember, working with an experienced insurance agency can help ensure that your company is always updated with any changes made to the ACA or other relevant healthcare laws.

If you are an employer searching for help in Georgia or South Carolina, reach out to a member of our team at Beckham Insurance Group. Located in Charleston, SC, and St. Simons, GA, we proudly offer complete access to all group health and supplemental insurance markets and products.

Creating a competitive—and compliant—benefits package that meets the needs of your business couldn’t be easier. To get started, contact us today for a free quote. We can’t wait to help you create a healthier and happier workplace!