StormChaser: ACA Affordability Increase

Posted on Posted in ACA Reporting

ACA Employer Mandate Affordability Threshold for 2019

The IRS announced an increase in the affordability percentage for 2019.

  • 9.56%   2015
  • 9.66%   2016
  • 9.69%   2017
  • 9.56%   2018
  • 9.86%   2019 

To avoid all risk of penalty under 4980(h) Employer Mandate, an employer must offer minimum essential coverage to at least 95% of full-time employees as well as “affordable” coverage for at least self-only coverage. An employer can use one of the safe harbors listed below to calculate the affordability.

  • W-2
  • FPL (Federal Poverty Level)
  • Rate of Pay

Using the W-2 safe harbor can result in unintentionally “non-affordable” employee contributions. Employer’s use the prior year W-2 to estimate the affordability and set the employee contributions for the year. At year end, the employer will use the actual W-2 for the year to confirm if their estimate was in fact affordable, if it wasn’t the employer has potential penalty exposure.

If you have questions on affordability and how to calculate using FPL or Rate of Pay, reach out to a Senior Benefit Consultant today!