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2023 ACA Compliance Checklist

2023 ACA Compliance Checklist

4 minute read

Public sector organizations with group health plans should be aware of changes to the Affordable Care Act (ACA) requirements that take effect in 2023.

Cost-Sharing Limits

Check your plan’s cost-sharing limits:

  • Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2023 plan year ($9,100 for self-only coverage and $18,200 for family coverage).
  • If you have an HSA-compatible high deductible health plan (HDHP), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2023, the out-of-pocket maximum limit for HDHPs is $7, 500 for self-only coverage and $15,000 for family coverage.

Affordability of Coverage

Under the ACA, an applicable large employer’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year (as adjusted each year). The adjusted percentage is 9.12% for 2023. This is the most significant decrease in this percentage since these rules were implemented. As a result, many employers may have to substantially lower the amount they require employees to contribute for 2023 to meet the adjusted percentage.


Health FSA Limits

For health FSAs, the employees’ salary reduction contribution can’t exceed $3,050 for plan years beginning in 2023. The employer can impose their own dollar limit on pre-tax contributions as long as their limit doesn’t exceed ACA’s maximum limit in effect for the plan year.

If your health FSA allows carryovers for unused amounts, confirm that the maximum unused amount from a plan year starting in 2023 that is allowed to be carried over to the immediately following plan year beginning in 2023 doesn’t exceed $610.


How to Calculate Employer Responsibility Penalties

If your organization is liable for an ACA penalty, the amount will need to be calculated. Depending on the circumstances, one of two penalties may apply under the ACA’s employer shared responsibility rules: the 4980H(a) penalty or the 4980H(b) penalty.

  • Under Section 4980H(a), an ALE will be subject to a penalty if it does not offer coverage to “substantially all” full-time employees (and dependents) and any one of its full-time employees receives an Exchange subsidy. For 2023, the 4980H(a) monthly penalty is equal to the applicable large employer’s (ALE) number of full-time employees (minus 30) multiplied by 1/12 of $2,880 for any applicable month.
  • Under Section 4980H(b), an ALE that offers coverage to substantially all full-time employees (and dependents) may still be subject to penalties if at least one full-time employee obtains an Exchange subsidy because the employer’s coverage is unaffordable or does not provide minimum value or the ALE did not offer coverage to all fulltime employees. For 2023, the 4980H(b) monthly penalty assessed on an ALE for each full-time employee who receives a subsidy is 1/12 of $4,320 for any applicable month. However, the total penalty for an ALE is limited to the 4980H(a) penalty amount.

 Download our 2023 ACA Compliance Checklist for detailed information. Employers should review these changes and make sure that they are still compliant.

Click to Download the 2023 IRS Contribution Limits Info Sheet

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Scott Fritz

Scott Fritz

Scott Fritz always has a willingness to help others, which has made him an ideal candidate for working in the public sector benefits arena throughout his career. He’s a team player and enjoys strategizing, problem solving, and finding effective cost-saving solutions for his clients. As an Employee Benefit Consultant with National Insurance Services, Scott is responsible for the overall assessment and management of an employer’s benefit plans. He is a licensed insurance agent and works with schools, cities, counties, and community mental health organizations in Michigan and North Carolina.