For plan years beginning in 2019, the Internal Revenue Service has announced that coverage will generally be considered affordable if the employee's required contribution for the lowest cost self-only health plan offered is 9.86% or less of his or her household income for the taxable year. For plan years beginning in 2018, the applicable percentage is 9.56%.
Because employers are unlikely to know an employee's actual household income, they may use a number of IRS provided safe harbors to determine affordability of their plan offerings.
This E-Alert is of interest to applicable large employers - generally those with 50 or more full-time employees (including full-time equivalent employees). Under the ACA’s employer shared responsibility ("pay or play") provisions, large employers may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependents.
As always, please do not hesitate to reach out to our Group Benefits team with any questions or concerns.