Affordability Safe Harbors Indexed to Increase Annually

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Affordability under the Affordable Care Act pops up in three different places – the Employer Mandate, the Individual Mandate and eligibility for premium tax credits or cost-sharing subsidies.

Until recently, only the affordability percentage for purposes of the Individual Mandate and eligibility for premium tax credits or cost-sharing subsidies were indexed to increase annually.  The percentage for the affordability safe harbors used by Applicable Large Employers subject to the Employer Mandate was not indexed.  The Internal Revenue Service recently issued guidance correcting this discrepancy.

Affordability

2015

2016

Employer Mandate Affordability Safe Harbors

9.56%

9.66%

Eligibility for Premium Tax Credits or Cost-sharing Subsidies

9.56%

9.66%

Individual Mandate

8.05%

8.13%