The Department of Health and Human Services (“HHS”) has published the U.S. Federal poverty guidelines for 2025. Many employers use these guidelines to set the premium costs for the lowest-cost health plan offered to employees to satisfy the Federal Poverty Line (“FPL”) Safe Harbor under the Affordable Care Act’s employer-shared responsibility provisions.
Employer Action Items
- Applicable Large Employers (“ALEs”) aiming to meet the FPL Safe Harbor requirements, which demonstrate that they provided affordable coverage to their eligible employees, should take note. The Federal Poverty Line can be utilized to determine the maximum employee contribution required for the lowest-cost self-only health plan offered to their full-time employees for non-calendar year plans in 2025 and beyond.
Summary
2025 Federal Poverty Guidelines Announced
HHS has published the U.S. FPL guidelines for 2025 for the 48 contiguous states and the District of Columbia. The Federal Poverty Line has increased to $15,650 for a family of one (from $15,060 in 2024). Many employers use the Federal Poverty Line to set premium costs for their lowest-cost health plan offered to employees, thereby satisfying the FPL Safe Harbor under the Affordable Care Act’s employer-shared responsibility provisions.
As a brief review, under the FPL Safe Harbor, an ALE’s offer of coverage to an employee is treated as affordable if the employee’s required contribution for the calendar month for the lowest cost self-only coverage that provides minimum value does not exceed 9.5% (as adjusted for inflation) of a monthly amount determined as the federal poverty level for a single individual for the applicable calendar year, divided by 12. This safe harbor is intended to provide ALEs with a predetermined maximum amount of employee contribution that, in all cases, will result in the coverage being deemed affordable, regardless of an employee’s change in hours worked or pay.
For 2025, if the lowest cost self-only contribution amount does not exceed 9.02% (the affordability percentage for plan years beginning in 2025) of the Federal Poverty Line standard guideline for a single person, the plan is deemed affordable, and no penalty will be assessed. HHS published the FPL guidelines for 2025 in mid-January of 2025. While the publication date was too late for plans with calendar year or even February plan years to rely upon, plans may, but are not required, use the Federal guideline amount in effect within six months before the start of the plan year. For example, this means that a calendar year plan starting on January 1, 2025, can have a FPL safe harbor limit of $113.20 (calculated by multiplying $15,060 by 9.02% and dividing by 12), and a non-calendar year plan beginning March 2025 or later can have a FPL safe harbor limit of $117.64 (calculated by multiplying $15,650 by 9.02% and dividing by 12).
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