Compliance Checklist: Affordable Care Act

Since the Affordable Care Act (ACA) was enacted in 2010, many changes have been made. In 2022, there are changes for employers sponsoring group health plans.

Plan Design Changes

Grandfathered plan status

A grandfathered plan is one that existed before the ACA was enacted on March 23, 2010. The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury announced on December 11, 2020, a final rule that allows greater flexibility for grandfathered plans.

The rule clarifies that grandfathered high deductible health plan (HDHP) coverage may increase fixed-amount cost-sharing requirements, like deductibles, to maintain its HDHP status without losing grandfather status. The purpose is to ensure participants and beneficiaries enrolled remain eligible to contribute to a health savings account (HSA).

The rule gives an alternative method of measuring permitted increases in fixed-amount cost-sharing which allows plans and issuers to prepare for changes in costs of health coverage over time.

Cost-Sharing Limits

Grandfathered health plans beginning on or after January 1, 2014, are subject to limits on cost-sharing for essential health benefits (EHB). Due to the ACA, a health plan’s out-of-pocket maximum for EHB cannot exceed $8,700 for self-only coverage and $17,400 for family coverage, effective for plan years beginning on or after January 1, 2022.

Review the out-of-pocket maximum for your plan to make sure it complies with the ACA’s limit for 2022. If you have an HSA-compatible HDHP, remember that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. (For 2022, the out-of-pocket maximum limit for HDHPs is $7,050 for self-only coverage and $14,100 for family coverage.)

Health FSA Contributions

An employee’s annual pre-tax salary reduction contribution to a health flexible spending account (FSA) must be limited to $2,500 for plan years starting on or after January 1, 2013. The health FSA limit for 2022 has yet to be announced.

With your advisors, monitor IRS guidance to the health FSA limit for 2022. Once the FSA limit is announced, check that your health FSA will not allow employees to make pre-tax contributions more than the limit for the 2022 plan year. If the 2022 limit is not announced in time for your open enrollment, use the 2021 limit to ensure compliance. Share the health FSA limit to employees as part of the open enrollment process.

Summary of Benefits and Coverage

A summary of benefits and coverage (SBC) must be provided from health plans and health insurance issuers to enrollees to help them understand their coverage and make decisions accordingly. The SBC must be given to participants and beneficiaries who enroll during the open enrollment period as well as to those who enroll outside of open enrollment.

The formatting requirements for the SBC are very strict. In 2019, the template for SBC materials was updated and its continued use is required for the 2022 plan year.

Provide the appropriate SBC template:

  • Self-funded plans: the plan administrator is responsible for creating and providing the SBC.
  • Insured plans: the insurer must provide the SBC to the plan sponsor. If you have an insured plan, confirm whether your health insurance issuer will assume responsibility for providing the SBCs.

Offering Coverage to Full-time employees

Employers must determine which employees are considered full-time employees under the employer shared responsibility rule. An employee who was employed at least 30 hours per week or 130 hours per month, on average, is considered a full-time employee. There are two methods for determining full-time employee status: the monthly measurement method and the look-back method. For employees with varying hours, the look-back measurement method may be easier.

Affordability of Coverage

The ACA dictates that health coverage is deemed affordable if the employee’s required contribution to the plan does not exceed 9.61% of the employee’s household income for the taxable year. This number decreased significantly from the 2021 percentage, so it is important for employers to review their payroll deductions to ensure compliance.

Reporting of Coverage 

Employers must report information to the IRS and to their full-time employees regarding the employer-sponsored health coverage they offer. Returns from reporting requirements are due in early 2022 for health plan coverage offered or given in 2021.

For a full review of all 2022 compliance updates and requirements, please visit this page. Additionally, Creative Benefits, Inc. recommends reaching out to a financial professional to determine which requirements apply to you.