IRS Revises ACA Affordability Percentage

affordable care actOn July 24, 2014, the Internal Revenue Service (IRS) released the Affordable Care Act (ACA)’s employer health plan affordability contribution percentage for 2015 in Revenue Procedure 2014-37.

The affordability of an employer’s plan is assessed in three situations: the shared responsibility penalty for applicable large employers, the individual mandate and the premium tax credit for purchasing health coverage through an Exchange.

For plan years beginning in 2015, employer-sponsored coverage will generally be considered affordable under both the pay or play rules and the premium tax credit eligibility rules if the employee’s required contribution for self-only coverage does not exceed 9.56 percent of the employee’s household income for the year.

However, applicable large employers using an affordability safe harbor under the pay or play
rules may have to continue using a contribution percentage of 9.5 percent to measure their plan’s affordability due to the language of the safe harbors.

Submitted by Darwin Allen, Haylor, Freyer & Coon, Inc., 800-289-1503

Leave a Reply