Critical ACA Updates for 2016

Affordability Threshold

The percentage of household income that is the threshold for determining affordability under Code Section 4980H(b) is 9.5%, indexed annually. The threshold for 2016 is 9.66%.


Employer Mandate Penalties

The penalty amounts under 4980H(a) (no offer of minimum essential coverage) and (b) (offer of coverage that is not affordable and does not provide minimum value) are indexed annually. For 2016 the penalties are:

  • 4980H(a): $2,160

  • 4980H(b): $3,240

Out-of-Pocket Maximum

The maximum amount of out-of-pocket expenses (deductibles, co-pays and co-insurance) permitted under a group health plan is adjusted annually. For 2016, the maximum dollar amounts for out-of-pocket expenses are:

  • Self-only coverage:$6,850

  • Family coverage:$13,700


Health Flexible Spending Account Maximum

The annual maximum amount that can be contributed to a health flexible spending account is $2,500, indexed annually. The maximum dollar amount for 2016 is $2,550. Note that employer contributions to health flexible spending accounts that are not available as cash (i.e., no cash out option), do not count towards this maximum.


Automatic Enrollment Repealed


The ACA provision mandating automatic enrollment of employees into employers’ group health plans was repealed by the Bipartisan Budget Act of 2015.


Cadillac Tax Delayed


The Consolidated Appropriations Act of 2016 delayed the application of the tax on high-cost coverage, known as the Cadillac Tax, for two years. The Cadillac Tax will now not take until plan years beginning on or after January 1, 2020. In addition, this Act that the tax will be deductible on the employer’s tax return. In other developments on this front, the 2017 Proposed Federal Budget proposes to adjust the threshold for the tax geographically, based on the average premium for gold coverage offered through the applicable state’s healthcare exchange.



© Boutwell Fay LLP 2016, All Rights Reserved. This handout is for information purposes only, and may constitute attorney advertising. It should not be construed as legal advice and does not create an attorney-client relationship. If you have questions or would like our advice with respect to any of this information, please contact us. The information contained in this article is effective as of March 31, 2016.



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