Affordable coverage - Glossary (2024)

In 2024, a job-based health plan is considered "affordable" if your share of the monthly premium in the lowest-cost plan offered by the employer is less than 8.39% of your household income.

  • The lowest-cost plan must also meet the minimum value standard.
  • If you’re the employee, affordability is based on only the premium you’d pay for self-only (individual) coverage.
  • For coverage starting January 1, if you’re offered job-based coverage through a household member’s job, affordability is based on the premium amount to cover everyone in the household.
  • Total household income includes incomes from everybody in the household who’s required to file a tax return.

If the premiums aren’t considered affordable for the employee and the household, they may qualify for savings in a Marketplace plan. But, if the premium is considered affordable for the employee, but not for other members of the household, then only the other household members may qualify for savings.

Example:

  • Household’s monthly income = $4,083 (about $49,000 per year).
  • 8.39% of the household’s monthly household income = $343

For the employee:

  • Monthly premium the employee would have to pay for the lowest-priced plan that covers just the employee = $300
  • Is the plan affordable for the employee? YES. The premium the employee would have to pay to cover just themselves ($300) is less than 8.39% of the household’s income ($343). Because the job-based coverage is affordable for the employee, the employee won’t qualify for savings in the Marketplace.

For other household members:

  • Monthly premium the employee would have to pay for the lowest-priced plan that covers other members of their household = $450
  • Is the plan affordable for other household members? NO. The premium the employee would have to pay to cover others in the household ($450) is more than 8.39% of the household’s income ($343). Because the job-based coverage isn't affordable for the employee’s household members, the employee’s household members may qualify for savings in the Marketplace.

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Affordable coverage - Glossary (2024)

FAQs

What is the definition of affordable coverage? ›

Affordable coverage under the ACA is determined by a maximum percent of household income employees would have to spend on the lowest-cost employer healthcare option. Employers must demonstrate that their coverage is affordable using one of three safe harbors methods.

What is the 95% rule for ACA? ›

Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to the end of the month in which they turn age 26, or be subject to penalties. This is known as the employer mandate.

What is one requirement of the Affordable Care Act answers? ›

The Affordable Care Act generally requires health insurance issuers to offer all of their non-grandfathered individual market and group market plans to any eligible applicant in the state.

What are the 4 levels of coverage offered under the Affordable Care Act? ›

There are four ACA metal tiers: bronze, silver, gold, and platinum. The law sorts the plans into different metal tiers according to their actuarial value (AV), or the percentage a health insurance plan will pay out of total costs for a specific benefit.

What does affordable mean in simple terms? ›

The adjective affordable can either mean "cheap," or it can imply that even if it's expensive, you have enough money to easily buy it. The verb afford is at the root, and its earliest meaning was "accomplish." Gradually, afford came to have the meaning "manage to buy."

What is an example of affordable? ›

The couple had spent hours looking for something affordable. We sell luxury clothes at affordable prices. Most choose to buy in more affordable villages a little way away. Credit unions can provide affordable loans for people in real need.

What is the 50/30 rule in the Affordable Care Act? ›

Under the Shared Responsibility for Employers Regarding Health Coverage (PDF) final rule, applicable large employers (ALEs) - generally defined as employers with 50 or more full-time or full-time equivalent employees in the prior year - are required to offer to at least 95 percent of their full-time employees - ...

How do I calculate ACA affordability? ›

The affordability threshold is the maximum amount that the employee's share of the premium can be. To calculate this, multiply the employee's household income by 8.39%. For example, if the employee's household income is $50,000, the affordability threshold would be $4,195 ($50,000 x 8.39%).

What must be covered under the Affordable Care Act? ›

A set of 10 categories of services health insurance plans must cover under the Affordable Care Act. These include doctors' services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services.

What is the Affordable Care Act for dummies? ›

The ACA requires insurance plans to cover essential health benefits, limits out-of-pocket expenses, and expands Medicaid eligibility, ensuring access to comprehensive care without excessive financial burdens. Additionally, the ACA includes provisions to reduce prescription drug costs.

What are three main points of the Affordable Care Act? ›

The law has 3 primary goals:
  • Make affordable health insurance available to more people. ...
  • Expand the Medicaid program to cover all adults with income below 138% of the FPL. ...
  • Support innovative medical care delivery methods designed to lower the costs of health care generally.
Mar 17, 2022

What does the Affordable Care Act not include? ›

What Benefits Does the Affordable Care Act Not Cover? The Affordable Care Act does leave two forms of insurance for adults out of its provisions — vision insurance and dental coverage. Although both of these services are considered essential benefits for children under the ACA, they are not included for adults.

What is the highest income to qualify for ACA? ›

The income range is $30,000 to $120,000 in 2024 for a family of four. (Income limits may be higher in Alaska and Hawaii because the federal poverty level is higher in those states.) The American Rescue Plan Act of 2021 also extended subsidy eligibility to some people earning more than 400% of the federal poverty level.

Does the Affordable Care Act cover everyone? ›

By law, your coverage can't be dropped or denied even if you have a pre-existing medical condition or get sick. The Covered California Marketplace will help uninsured Californians gain access to affordable, quality, and accessible health care, including Essential Health Benefits.

How do I know if I am part of the Affordable Care Act? ›

To check if you meet the expanded eligibility criteria, contact your employer. If you are not eligible for CalPERS health coverage, you may purchase coverage through Covered California, California's health insurance marketplace, and may be eligible for premium tax credits to subsidize costs.

What is the meaning of affordable care? ›

About the Affordable Care Act

The law has 3 primary goals: Make affordable health insurance available to more people. The law provides consumers with subsidies (“premium tax credits”) that lower costs for households with incomes between 100% and 400% of the federal poverty level (FPL).

What does the Affordable Care Act require coverage for? ›

These include doctors' services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services. Plans must offer dental coverage for children.

What is the meaning of affordable services? ›

If something is Affordable, its price is reasonable, it is inexpensive, and most people can afford it. An affordable product or service is one that is within most people's budget. In this context, the word 'budget' means how much money somebody has available or put aside to purchase something.

What is the meaning of affordable health? ›

Similarly, health care affordability describes whether a person or organization has sufficient income to pay for or provide for health care costs.

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