“In 2021, TRS districts’ contributions towards health coverage varied significantly across the state. Overall, the weighted average district contribution is approximately $330. The state contribution of $75 has remained in effect since 2001 as well as the required public employer minimum contribution of $150, neither which has been increased in the last 20 years.” – Segal – TRS ActiveCare Benefits Study
Friendswood ISD trustees to consider increasing health insurance contributions for employees
Friendswood ISD is considering upping its contributions to its employees’ health insurance premiums and is expected to make a decision in August.
However, some of the options come with higher costs to the district, while not increasing contributions could net the district penalties.
The overview
For an FISD employee to earn $245 in health care contributions from the district each month, they have to make at least $20.72 per hour, according to district documents.
FISD has 168 employees who earn less than $20.72 per hour, 66 of whom take health insurance.
FISD trustees will choose between four options for health insurance premium contributions:
- Option 1: No increase, which will risk the district incurring penalties if employees making under $20.72 an hour apply for marketplace coverage while stating the district’s coverage is not affordable. The district could incur a $4,160 penalty per every employee who goes to the marketplace while stating the district’s coverage is not affordable.
Friendswood ISD health insurance premium penalty costs
While district officials say it’s rare for employees to apply for marketplace coverage, there is a possibility that any of the 168 employees making under $20.72 an hour could seek coverage elsewhere. As a result, the district could incur a penalty for each employee that does so. Of the 168 employees, 66 currently have coverage through FISD. The district gave examples of each group who could be seeking coverage outside of the district, as well as the total possible penalty.
- Option 2: Raise salaries so all eligible employees make above $20.72 an hour, which would change the level of employee contributions. FISD Chief Financial Officer Amber Petree said this option was “very costly.”
- Option 3: Go by the poverty rate and increase the monthly contribution for a specific employee group or all groups, which would put caps on the yearly insurance premium to keep it affordable but would increase the district’s monthly contribution amount to $366. This option would cost $340,500.
- If the district chooses to provide a contribution increase to all employees, the following groups would get the following contributions:
- Auxiliary (custodial, food service, maintenance, transportation): $121 monthly increase, $366 total contribution after increase
- Paraprofessionals (aides, support staff): $121 monthly increase, $366 total contribution after increase
- Professionals: $50 monthly increase, $295 total contribution after increase
- If the district chooses to provide a contribution increase to all employees, the following groups would get the following contributions:
- Option 4: Increase contribution for all employees
- Option 4A: $35 monthly increase, $280 total contribution after increase
- Option 4B: $50 monthly increase, $295 total contribution after increase
- Option 4C: $65 monthly increase, $310 total contribution after increase
Quote of note
Although a decision hasn’t been set, Superintendent Thad Roher said it may be better to find a way to contribute more to teachers.
“Health care isn’t something that you see on the salary schedule, because you don’t see when you’re applying what we contribute,” Roher said at the meeting. “I see exactly where it counts on making it affordable, but [I] just want to advocate for the people who teach those kids.”
Petree said she is not trying to sway the board on a specific decision, but she said she believes if teachers don’t get a higher contribution compared to other staff members, they may be understanding due to a salary increase approved at the June 10 board meeting.
Read this and weep:
IRS Increases 2024 ACA Penalty Amounts | The ACA Times
How the IRS Calculates 4980H(a) Penalties
At a glance, the 4980H(a) penalty may seem negligible due to its small amount. However, the penalty amount applies across the entire workforce and can quickly add up.
For example, if an organization in 2024 has 300 full-time employees, and one of their employees receives a PTC for 12 months, the penalty would be $801,900.
Here’s the formula: $2,970 x (300-30) = $801,900.
The 4980H(a) penalty applies across every full-time employee and affects all 300 full-time employees, minus the 30-employee exemption. This occurs even if only one employee receives a PTC.
2024 4980H(b) Penalty
For the 2024 tax year, the 4980H(b) penalty is $372 a month, or $4,460 per year, per employee. This is an increase from $4,320 in 2023.
Unlike the 4980H(a), the IRS issues 4980H(b) penalties on a per-violation basis. In other words, if an employee has inadequate coverage and seeks assistance from a state or federal marketplace, a penalty may be assessed.
The IRS issues a 4980H(b) penalty when an employer offers its full-time employees coverage that is either unaffordable, does not meet MV, or both. Like the 4980H(a) penalty, the organization must also have at least one employee obtain a PTC from a state or federal health exchange, as this is the trigger for the IRS assessing ACA penalties.