IRS Updates Affordability Threshold for 2018

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The Internal Revenue Service has updated the affordability percentage for determining if coverage is affordable under the three affordability safe harbors for the Employer Mandate. For example, if an employer is using the Federal Poverty Line safe harbor and the employee’s required contribution for self-only coverage for the 2017 plan year is equal to or less than 9.69% of the Federal Poverty Line, then coverage is affordable. For plan years beginning in 2018, the percentage decreases to 9.56% (which is what it was for the 2015 plan year). Employers subject to the Employer Mandate should review their contribution strategy to ensure compliance with the new guidance.