Affordability Safe Harbor
August 29, 2023
Beginning January 1, 2024, the new affordability percentage for employer-sponsored coverage will be reduced to 8.39% of the employee’s household income. This is applied to self-only coverage for the lowest priced ACA compliant plan offered by the employer.
Applicable Large Employers (ALEs) should be made aware of this new affordability percentage in an effort to offer affordable, minimum value health coverage to their full-time employees. The decrease in percentage means that employers may need to increase their portion of the premium contribution to comply with affordability requirements.
As we have seen in the past, the Internal Revenue Service (IRS) instituted three safe harbors for employers to utilize:
Employers should also be mindful of potential penalties if the employee contribution exceeds 8.39% and the employee purchases an individual plan on the exchange and receives a Premium Tax Credit (PTC).
For more information, please contact compliance@benefitmall.com.