Compliance Bulletin: Affordability Percentages Will Increase for 2019

OVERVIEW

On May 21, 2018, the Internal Revenue Service (IRS) issued Revenue Procedure 2018-34 to index the contribution percentages in 2019 for purposes of determining affordability of an employer’s plan under the Affordable Care Act (ACA). 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; and
  • 8.3 percent of the employee’s household income for the year, for purposes of an individual mandate exemption (adjusted under separate guidance).
ACTION STEPS

These updated affordability percentages are effective for taxable years and plan years beginning Jan. 1, 2019. This is 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.

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Ann Poland

Ann Poland, MJ's Director of Compliance oversees all compliance and regulatory requirements for the firm. She is responsible for proactively identifying, evaluating, reporting, reviewing and communicating regulatory requirements to our clients and team.