ACA Affordability Percentages Will Increase for 2019

The IRS recently issued a Revenue Procedure  to index the contribution percentages used to determine the affordability of an employer’s plan under the Affordable Care Act (ACA)

These updated affordability percentages are effective for taxable years and plan years beginning Jan. 1, 2019. They represent a significant increase from the affordability contribution percentages for 2018.

As a result, some employers may have additional flexibility with respect to their employee contributions for 2019 to meet the adjusted percentage. Affordable Coverage Test For plan years beginning in 2019, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

- 9.86 percent  of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility

-8.3 percent  of the employee’s household income for the year, for purposes of an individual mandate exemption (adjusted under separate guidance )

This adjustment means that employer-sponsored coverage for the 2019 plan year will be considered affordable under the employer shared responsibility rules if the employee’s required contribution for self-only coverage does not exceed 9.86 percent of the employee’s household income for the tax year. The 2018 affordability percentage for the pay or play rules and premium tax credit eligibility was 9.56 percent. The 2018 percentage for the individual mandate exemption was 8.05 percent.

For more guidance on this and other compliance topics, contact Hollis Companies today.

www.holliscompanies.com

Ryan Rodrigue