The IRS recently issued a Revenue Procedure to index the medical insurance premium 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. 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 tax year. This is for purposes of both the “play or pay” rules and premium tax credit eligibility.This represents a significant increase from the affordability contribution percentage for 2018. The 2018 affordability percentage for the “play or pay” rules and premium tax credit eligibility was 9.56 percent. As a result, some employers may have additional flexibility with respect to their employee contributions for 2019 to meet the adjusted percentage. For more guidance on this and other compliance topics, contact a KnowledgeBroker.
