2024 ACA Compliance Checklist

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Public sector organizations with group health plans should be aware of changes to the Affordable Care Act (ACA) requirements that take effect in 2024. 

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 2024 plan year ($9,450 for self-only coverage and $18,900 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 2024, the out-of-pocket maximum limit for HDHPs is $8,050 for self-only coverage and $16,100 for family coverage.

Affordability of Coverage

Health plan coverage is considered affordable if the employee's contribution to the plan remains within 9.5% of their household income for the taxable year. This affordability test focuses on the portion of the annual premiums for self-only coverage, excluding any additional costs for family coverage. In cases where an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that provides the minimum value.

To determine affordability, employers can utilize three optional safe harbors provided by the IRS. For plan years starting in 2024, the adjusted affordability percentage is set at 8.39%, which represents a significant decrease and is the lowest it has ever been set, surpassing the statutory affordability percentage of 9.5% by more than 1%. Consequently, many employers may need to considerably reduce the amount employees are required to contribute in order to meet the adjusted percentage.

Health FSA Limits

For health FSAs, the employees’ salary reduction contribution can’t exceed the adjusted limit for the plan year beginning in 2024 (once this limit is released by the IRS). 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. For plan years beginning in 2023, the health FSA limit is $3,050. This limit has not been released yet for 2024.

If your health FSA allows carryovers for unused amounts, confirm that the maximum unused amount from a plan year starting in 2024 that is allowed to be carried over to the following plan year beginning in 2025 doesn’t exceed the adjusted limit (once this limit is released by the IRS). For plan years beginning in 2023, the health FSA carryover limit is $610. The carryover limit has not been released yet for 2024.

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 2024, 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 $2,970 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 2024, the 4980H(b) monthly penalty assessed on an ALE for each full-time employee who receives a subsidy is 1/12 of $4,460 for any applicable month. However, the total penalty for an ALE is limited to the 4980H(a) penalty amount.

Download our 2024 ACA Compliance Checklist for detailed information. Employers should review these requirements and develop a compliance strategy. All health plan documents should be updated to reflect any new plan limits is and that information is communicated to employees during open enrollment time.