Benefits Insights

HHS recently updated the Federal Poverty Limit (FPL) for 2014. Before the Affordable Care Act, when HHS would announce the annual update to the Federal Poverty Level (FPL), most employers could emulate Alfred E. Neuman with a “What, me worry?” kind of attitude. That is no longer the case. Employers need to follow the FPL closely now because it is a critical component in planning for the pay or play penalties under the employer mandate, which will be effective in 2015.

First, the FPL determines who is eligible for Medicaid. If an employee is eligible for Medicaid, no employer mandate penalty can be assessed against the employer for failure to offer coverage to that employee. In states that have adopted the expanded Medicaid guidelines in the Affordable Care Act, individuals with household income of up to 138% of the FPL are eligible for Medicaid coverage. The 2014 FPL chart below shows 138% of the FPL for households from 1 to 8 members. Both Ohio and Kentucky have expanded Medicaid, while Indiana is still undecided.

Second, the employer mandate penalties can only be assessed if one or more employees obtain financial assistance to purchase health coverage from a federal or state exchange. In order to qualify for financial assistance, the employee must have household income of between 100% and 400% of FPL. The 2014 FPL chart below shows 100% and 400% of the FPL for households from 1 to 8 members. 

Finally, an employee is not eligible for financial assistance (and therefore, cannot trigger an employer mandate penalty) if the employer offers minimum value coverage that is affordable to the employee. 

One way to satisfy the affordability test is if the employee’s premium share for self-only coverage is no more than 9.5% of the FPL for one person.  Using the chart below, 9.5% of the one-person FPL for 2014 is $1,108.65 annually, or $92.39 per month.

2014 Federal Poverty Limit:

The 2014 FPL chart above is for the 48 contiguous states and the District of Columbia.  Alaska and Hawaii have separate charts with higher thresholds.  For households with more than 8 persons, add $4,060 to the 100% column for each additional person.