Updated guidelines set the 2023 federal poverty level (FPL) at $14,580 (up from $13,590 in 2022) for a person living in the mainland US, but $16,770 in Hawaii and $18,210 in Alaska. Under the Affordable Care Act (ACA), the FPL can affect employer shared-responsibility (ESR) play-or-pay assessments in two ways:
2023 play-or-pay FPL affordability safe harbors. The Department of Health and Human Services (HHS) issued updated FPL figures effective Jan. 12 that will apply for 2024 calendar-year plans and noncalendar-year plans beginning in 2023. Employers with calendar-year plans can’t rely on those higher FPLs for 2023 affordability testing. Instead, 2023 calendar-year plan sponsors must use the 2022 FPL amounts. As a result, the 2023 FPL affordability safe-harbor monthly employee contribution limits for the lowest-cost, self-only MEC with minimum value are as follows:
Special rule for noncalendar-year plans. Noncalendar-year plans may use the FPL in effect within six months before the first day of the plan year. For the 2023 plan year noncalendar-year plans benefit from using the higher 2023 FPL amounts.
The adjusted affordability percentage applies on a plan-year — not calendar-year — basis. This means noncalendar year plans beginning in 2022 will continue to use 9.61% to determine affordability in 2023 until their new plan year starts. As a reminder, for 2022 noncalendar-year plans using the mainland US FPL affordability safe harbor, the required employee contribution cannot exceed $108.83 per month, calculated as (9.61% for 2022 x $13,590 FPL in 2022) ÷ 12, rounded to the nearest penny.