Certified Application Counselor Practice Test

In the context of employer health plans, what is considered "affordable" coverage?

1. Coverage that costs no more than 9.83% of an employee's income

2. Coverage that is available for all employees regardless of income

3. Coverage that provides higher benefits than standard plans

4. Coverage that is limited to emergency services

The correct answer is: Coverage that costs no more than 9.83% of an employee's income

The definition of "affordable" coverage in the context of employer health plans is determined by how much of an employee's income is spent on the premium for their health insurance. Specifically, for coverage to be considered affordable, it must not exceed a set percentage of the employee's household income. As of the guidelines up to the date specified, this percentage is 9.83%. Choosing coverage that costs no more than 9.83% of an employee's income ensures that employees do not face excessive financial burdens relative to their earnings for essential health coverage. This threshold is a key aspect of the Affordable Care Act (ACA) guidelines, which aim to make healthcare accessible to a broader range of individuals while still allowing employers to offer a variety of health plan options. The other options provided do not align with the definition of affordability. For instance, coverage that is available to all employees irrespective of income does not address whether the cost is manageable compared to their income. Similarly, higher benefits or limitation to emergency services does not inherently speak to the affordability criterion, as they could still be unaffordable relative to an individual’s income level. Thus, the correct selection regarding affordability is the one that specifically relates to the percentage of income that can be reasonably allocated toward health