The Rate of Pay Safe Harbor: 1 of 3 Affordability Safe Harbors

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Fortunately, the IRS has made available three affordability safe harbors that employers can use to help prove ACA affordability.

Using the 3 safe harbor calculations we can answer how employers prove to the IRS that the healthcare plans they are offering to their workforce are affordable under the ACA. This week we will be talking about the first one: the Rate of Pay Safe Harbor.

So, how do employers prove to the IRS that the healthcare plans they are offering to their workforce are affordable under the ACA?

It’s an important question for Applicable Large Employers (ALEs) or employers with 50 or more full-time and full-time equivalent employees. That’s because providing affordability is a critical piece for complying with the ACA’s Employer Mandate and failing to do so could result in penalties.

With the final 2021 ACA reporting deadline approaching quickly, now is the time to ensure you’re correctly applying and documenting the safe harbors in your filings.

To begin, we answer the question, What is the Rate of Pay Safe Harbor?

The Rate of Pay Safe Harbor is a method for proving ACA affordability that is based on an employee’s hourly rate or monthly salary rate. Best practices suggest performing the safe harbor calculation for each full-time employee monthly.

To calculate ACA affordability for the 2022 tax year under the Rate of Pay Safe Harbor using hourly workers’ earnings, take the employee’s lowest hourly rate as of the first day of the coverage period and multiply it by 130, the minimum total of hours an employee must work on average to be ACA full-time.

Then, take that product and multiply it by the 2022 affordability threshold, 9.61%. This will identify the maximum monthly premium that the employee can pay to satisfy 2022 ACA affordability. 

Take, for example, $20/hr x 130 hours x 9.61% = maximum monthly premium of $249.86. 

For this particular situation, to claim the Rate of Pay Safe Harbor using hourly wages, the monthly contribution cannot exceed $249.86.

For a salaried employee, take the monthly salary as of the first date of the coverage period and multiply it by the appropriate affordability percentage for the year. 

Here’s an example: $2,000 monthly salary x 9.61% affordability threshold for 2022 = maximum monthly premium of $192.20 to claim the Rate of Pay Safe Harbor. 

Tommy Gaffney

VICE PRESIDENT OF SALES

Tommy is a Vice President of National Sales with over 17 years experience in healthcare, commercial, and personal lines markets. Connect with Tommy
📞 (888) 447-9994
in https://www.linkedin.com/in/tommygaffneyrsm/
✉️ [email protected]

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The Evolved Benefits Process

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Let’s talk about how easy it is to work with Evolved Benefits.

As an employee benefits advisor, we are a product that you can offer as a solution. And, of course, you get compensated for doing that as you do with every other solution you provide your customers.

First and foremost, here at Evolved Benefits, we understand your process.

We understand that you need to turn a prospect into a customer, develop a relationship with that customer, and address and find out what their needs are. And then of course, if the solutions that you bring to the table fit the needs you’re addressing, you are their broker, and you’re going to continue developing that relationship with them over time as renewals come.

And hopefully, you’re using those opportunities to continue to add value. So you can have a long-term relationship with your client. We consider you the employee benefits advisor, our client here at Evolved Benefits. We do not work direct B2B with any company. We only work with brokers and general agencies that have relationships with brokers.

We do very well with that relationship. So, our process is straightforward. It’s almost a one, two, three.

First and foremost, we want to get on a discovery call to find out if you’re already working with the target industries where our solutions fit best. And at that point, we can teach you how to grow your book of business organically. Continue to add that value, add more revenue to your agency, and be a solid broker to your client, which repels any other entity from trying to come in all the little side doors and trap doors to steal your business.

Secondly, we want to do a discovery call with any opportunity you have.

And what will usually take place there is we’ll ask some questions and once we kind of pre-qualify that the group is a good fit, we will generate a proposal. It’s so easy to generate a proposal.

Our products are shelf-rated, and the rates are the same nationwide. So you don’t need to give us a census because there’s no quoting engine for us to generate a proposal for you. All we need is the company name, the effective date, and either your name as the broker or the name of your agency, and the proposal’s done.

From that point, we can set up a call, have a conversation, discuss other needs, and make sure you are in compliance.

Additionally, I can accompany you on the call with your group. Or, you can digest everything we talk about in our conversation, take it to the group, see if they want to lean in, and implement these solutions.

So from there, we have an implementation call.

We find out how you’re going to enroll the group. We certainly have some resources for you. I’ve got some resources nationwide with enrollment companies that do everything. They do the call center. They set up a platform to manage it all year long that tracks eligibility.

They’ll even set it up if you have a group that needs individual billing. If there’s a 1099 scenario, they’ll even do the individual billing on behalf of the group. So we’ve got all kinds of resources to fit these scenarios.

Our service team is in-house and you will speak with a live person. Also, bilingual, if needed. We will then set up an implementation call for the backend. We want the employer to understand that there is a very easy-to-use employer portal.

And we’re going to teach them how to set up that profile and how to add, term, and delete employees because that’s all they will need to do. Our system is so sophisticated; everything’s automated, and it all updates itself as you go in and do those add, terms, and deletes.

And of course, throughout the year, the employees will want to call, maybe four months down the road, someone finally uses the product and they need help looking up a doctor or an urgent care facility. Maybe they have some questions about how their plan works because they forgot since open enrollment was four months ago.

We have the support here, and we’re here Monday through Friday. We handle east coast to west coast. It’s so easy to work with Evolved Benefits. If you haven’t scheduled a call with us, if you haven’t answered any of my reach-outs on LinkedIn, I certainly hope you do.

I want to meet all of you. And of course, I do look forward to talking to all of you very soon.

Tommy Gaffney

VICE PRESIDENT OF SALES

Tommy is a Vice President of National Sales with over 17 years experience in healthcare, commercial, and personal lines markets. Connect with Tommy
📞 (888) 447-9994
in https://www.linkedin.com/in/tommygaffneyrsm/
✉️ [email protected]
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    You are Missing Out on a Revenue Opportunity

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    Organic growth is created by adding new clients or more business from existing clients. It’s essentially expanding your business from within using the resources you have, including skills, knowledge, experience, relationships, and other tools. Organic growth is healthy for an agency and reflects a long-term, solid commitment to building a business.

    1. Research your target clients

    Agencies that conduct regular research on their target audience grow up to 70% faster and are almost 50% more profitable than agencies that don’t.

    2. Focus on a well-defined niche

    Concentrating on a well-defined niche enables you to reduce marketing costs and competition while increasing market share. Our studies show that high-growth agencies are 75% more likely to have a highly-focused niche.

    3. Develop strong, easy-to-understand differentiators

    Agencies with unique differentiators have a much easier job communicating their value to prospective clients, setting themselves apart (and above) from the competition, and winning more business. The best differentiators address the needs and concerns of the prospective client.

    Conclusion

    There’s nothing mysterious about organic growth. There’s a scientific approach to it that requires some homework, discipline, and stick-to-it-ness. Research is key and the driver of a more powerful strategy and more efficient and effective marketing.

    Let’s set up a call at your next availability…

    [email protected]

    619.909.9204

    Tommy Gaffney

    VICE PRESIDENT OF SALES

    Tommy is a Vice President of National Sales with over 17 years experience in healthcare, commercial, and personal lines markets. Connect with Tommy
    📞 (888) 447-9994
    in https://www.linkedin.com/in/tommygaffneyrsm/
    ✉️ [email protected]

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    Why Evolved Benefits and Why Brokers Should Call Us

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    Evolved Benefits, and our insurance carriers, are committed to being creative and innovative regarding the solutions you need. We both have the same goal of providing the best solutions for your clients in the most cost-effective way. We will work with you every step to ensure that you get the proper knowledge and understanding you need to evolve and provide the best solutions to your groups.

    So exactly who is Evolved Benefits, and how do we help?

    Evolved Benefits is a general specialty agency that provides nationwide consulting and plan configurations to meet your needs as a broker and your clients’ needs, especially in niche markets.

    We help brokers find solutions for everything outside of major medical, including low-cost, ACA-compliant health plans, voluntary benefits, self-funding, government contracting, prevailing wage, and federal, state, and local wage ordinances.

    We know that every employer wants their broker to provide solutions for the entire population, not only for management and full-time employees. Our consulting approach can help you determine where the service holes are.

    As a broker, you will grow your book of business organically, increasing your agency revenue and protecting all of your clients from your competition.

    We understand that everyone wants to grow their agency, and it’s a point of frustration because the most common problem with that goal is a lack of sales opportunities.

    Every good broker believes they should have more sales opportunities than they currently do. Evolved Benefits has been instrumental in helping brokers find a path into a deep blue ocean full of new possibilities. We know what it’s like to be good at what you do, but it’s very frustrating when you don’t have enough opportunities to prove that.

    We’ve helped hundreds of brokers grow their revenue with our proven strategy, and it’s really simple. We help you grow your revenue and grow your book organically without writing new business. We leverage prospecting opportunities that your competitors are not looking at, and every broker we’ve worked with so far has more sales opportunities than they know what to do with.

    I encourage you to message me here on LinkedIn and let’s set up a time to have this conversation.

    If those two things don’t happen, rest assured that I will be reaching out to you here on LinkedIn, and hopefully, we will have a conversation this year.

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    Target Industries

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    This week we are talking about the deep blue ocean of opportunities in target industries. Every employee benefits advisor out there has a strategy. Most of the time, it’s a strategy to tackle the major medical market or what many people call the fully insured marketplace.

    We found an opportunity in the marketplace that helps out with some of the employer mandates for smaller target industries.

    You could have a small group, you could have a large group, you could have some of the self-funded and level-funded and some of the hybrid plans in between. Then, of course, you could have the whole world of ancillary, worksite, and voluntary benefits.

    With Evolved Benefits, we found an opportunity out in the marketplace that really helps out with some of the employer mandates that are out there.

    You’ve got some states that enforce the individual mandate, and then on a federal level (which every state is subject to), you’ve got an Employer Mandate A and an Employer Mandate B. If an employer has 50 or more employees, they’re considered an Applicable Large Employer and they’re subject to ACA filing and reporting.

    Our current presidential administration has given funding to the IRS, and they are hiring thousands of auditors to audit all of these Applicable Large Employers. What I have here is our target industries, and they happen to be the low-hanging fruit that the IRS is looking at to target first because they know that most of these companies are out of compliance. They also know that most companies don’t even realize they’re out of compliance.

    Let’s talk about why.

    First of all, there are numerous companies: security guard companies, hospitality companies, landscaping, staffing, trucking, assisted living facilities, construction, manufacturing, plumbing, restaurants, grocery stores, home health care, housekeeping, janitorial, agricultural and ranching, and even cannabis companies. Those are just a shortlist of all the types of companies out there that have large populations of part-time, seasonal, and variable hour employees. Since most of them have never offered benefits to a majority of the staff, they don’t realize that they’re out of compliance.

    When the benefits advisors that I talk to analyze their book of business, they see that they have many of these companies on the books. Still, they’re used to maybe having 10, 11, or 12 of the core staff on a major medical plan, and the 137 of the others that are part-time or variable hours don’t ever get offered anything.

    One thing that I think a lot of employee benefits advisers fall short on is helping the company look at their roster and run their entire roster through an FTE calculator – that’s a Full-Time Eligible calculator – to find out how many actual FTEs they have and make sure that they’re offering at least minimum essential coverage to 95% of the FTE.

    Again, there’s a whole ocean of opportunity out here that the IRS is looking at. These are the ones that are going to get the penalty letters first. Still, these are the types of companies that even the incumbent broker doesn’t realize can cast a net over the entire population of employees and help all these part-time and variable hour employees that work for these companies.

    Every single person deserves access to affordable health care. That’s why Evolved Benefits was created. We provide ACA-compliant health plans. They are restricted health plans, but they’re very robust. Evolved Benefits gives a lot of access to all the acute services that everyone needs and we also have voluntary benefits and worksite benefits to help marry up and supplement and do the best job of keeping the cost down for these employees while giving them what they need in order to keep some financial wind in their sails if they have any major medical issues happen to them and their paychecks get interrupted.

    If you’d like to learn more about this deep blue ocean, not just about the ocean itself, and if you’d like to learn how to prospect, I have a fantastic system that I’ve developed. It works masterfully. You could use this to prospect any potential clients or even your existing clients.

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