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2024 ACA Pay or Play Increasing Penalties

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On March 9, 2023, the IRS revised the penalty amounts for the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA) for 2024. For the calendar year 2024, the adjusted $2,000 penalty amount is $2,970, and the revised $3,000 penalty amount is $4,460.

 

Pay Or Play Penalty

An applicable large employer (ALE) that complies with the pay or play regulations is only subject to penalties if at least one full-time employee receives a subsidy for Exchange coverage. Employees provided affordable minimum value (MV) coverage must be qualified for these Exchange subsidies. Based on the circumstances, the pay-or-play rules allow for applying either the 4980H(a) penalty or the 4980H(b) penalty.

 

  • Under Section 4980H(a): If an ALE does not provide coverage to typically at least 95% of its full-time workers (and dependents), and any full-time worker obtains a subsidy toward their Exchange plan, the ALE will be subject to a penalty. For any applicable month, the monthly fine imposed on ALEs that do not provide coverage to almost all full-time employees and their families equals the number of full-time employees at the ALE (minus 30), multiplied by 1/12 of $2,000 (as adjusted).

 

  • Under Section 4980H(b): If at least one full-time employee receives a subsidy through an Exchange due to the ALE not providing coverage to all full-time employees, the ALE’s coverage being prohibitively expensive, or the ALE’s coverage not providing MV, the ALE may still be subject to a penalty even if it offers coverage to nearly all full-time employees (and dependents). For each full-time employee who receives a subsidy, an ALE is subject to a monthly fine equal to 1/12 of $3,000 (as adjusted) for any applicable month. Nevertheless, the 4980H(a) penalty amount is the maximum punishment for an ALE.

 

Important Dates Description
August 16, 2022 For 2023, the IRS published revised pay-or-play penalty amounts.
March 9, 2023 For 2024, the IRS published revised pay-or-play penalty amounts.
2024 Calendar year 2024 penalty amounts are based on a failure to provide affordable minimum value coverage during the 2024 calendar year

 

IRS Pay Resources

The following IRS websites are available to employers for more information and updates regarding. pay or play provisions:

 

 

This ACA Pay Penalty Outline is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

*sourcehttps://content.zywave.com/file/b1f47fcf-ae5c-4d8a-a1b2-1d74f01159e9/ACA%20Pay%20or%20Play%20Penalties%20Will%20Increase%20for%202024.pdf *

The Basics Employers Need to Know About CAA Prescription Drug Reporting

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Rx reporting is a federal mandate that requires insurance companies and group health plans to provide a report of prescription drug data to the government. Logistics regarding the act can be found under Section 204 (of Title II, Division BB) of the Consolidated Appropriations Act, 2021 (CAA).

 

CAA Submission Requirements

The following list includes the information that the CAA requires insurance companies and employer-based health plans to submit:

  • Prescription drugs that are the most frequently prescribed
  • Prescription drugs that account for the most spending
  • Spending reports on prescription drugs and healthcare services
  • Prescription drug rebates from drug manufacturers
  • Premiums and cost-sharing that patients pay

 

            What does the government do with this information?

The federal government wants to use the information and data to examine the prescription drug industry with the potential to make legislative or regulatory changes. Centers for Medicare & Medicaid Services (CMS.gov) expresses that this information will be helpful to:

  • Identify the central causes of increases in prescription drug and healthcare spending
  • Understand how prescription drug rebates impact premiums and out-of-pocket costs
  • Promote transparency in prescription drug pricing

 

Important information and deadlines

This is an annual reporting requirement; plans an issuers will generally submit these reports in June each year, reporting information for the prior calendar year. Please note that it is required to comply with this mandate regardless if your company is fully insured or self-funded. The following deadlines should be noted:

 

Calendar Year to Report Deadline
2022 June 1, 2023
Subsequent calendar years June 1st of each year

 

For more information on this topic, please contact MNJ Insurance Solutions.

 

This Rx reporting summary is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

Resources

CMS.gov provides the following resource:

  • On Nov. 23, 2021, the Departments published an interim final ruleregarding the requirement to report pharmacy and drug costs.
  • Transparency in coverage FAQswere released on Aug. 20, 2021.
  • An FAQabout the submission grace period and reporting flexibilities for 2020 and 2021 data was released on Dec. 23, 2022.
  • More information, including RxDC reporting instructions, is available through the HHS’ RxDC website.
  • Prescription Drug Data Collection (RxDC) Reporting Instructions: https://regtap.cms.gov/reg_librarye.php?i=3860

 

 

2023 ACA Pay or Play Increasing Penalties

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On August 16, 2022, the IRS revised the penalty amounts for the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA) for 2023. For the calendar year 2023, the adjusted $2,000 penalty amount is $2,880, and the revised $3,000 penalty amount is $4,320.

 

Pay Or Play Penalty

An applicable large employer (ALE) that complies with the pay or play regulations is only subject to penalties if at least one full-time employee receives a subsidy for Exchange coverage. In general, employees provided affordable minimum value (MV) coverage are not qualified for these Exchange subsidies. Based on the circumstances, the pay-or-play rules allow for applying either the 4980H(a) penalty or the 4980H(b) penalty.

 

  • Under Section 4980H(a): If an ALE does not provide coverage to around 95% of its full-time workers (and dependents), and any full-time worker obtains a subsidy toward their Exchange plan, the ALE will be subject to a penalty. For any applicable month, the monthly fine imposed on ALEs that do not provide coverage to almost all full-time employees and their families equals the number of full-time employees at the ALE (minus 30), multiplied by 1/12 of $2,000 (as adjusted).

 

  • Under Section 4980H(b): If at least one full-time employee receives a subsidy through an Exchange due to the ALE not providing coverage to all full-time employees, the ALE’s coverage being prohibitively expensive, or the ALE’s coverage not providing MV, the ALE may still be subject to a penalty even if it offers coverage to nearly all full-time employees (and dependents). For each full-time employee who receives a subsidy, an ALE is subject to a monthly fine equal to 1/12 of $3,000 (as adjusted) for any applicable month. Nevertheless, the 4980H(a) penalty amount is the maximum punishment for an ALE.

 

 

Important Dates Description
August 16, 2022 For 2023, the IRS published revised pay-or-play penalty amounts.
March 1, 2022 Prior to this, the IRS updated the 2023 affordability percentage to 9.12%
2024 Calendar year Updates are based on coverage offered during the 2023 calendar year

 

This ACA Pay Penalty Outline is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

*source:https://content.zywave.com/file/b1f47fcf-ae5c-4d8a-a1b2-1d74f01159e9/ACA%20Pay%20or%20Play%20Penalties%20Will%20Increase%20for%202024.pdf *