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The IRS recently announced that the contribution percentages used to determine affordability for an employer’s health plan under the Affordable Care Act will decrease. For plan years starting in 2020, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:
- 9.78% under the employer shared responsibility mandate (for applicable large employers, also known as the employer mandate or pay or play rules)
- 9.78% under the premium tax credit eligibility rules (for low-income people to purchase health coverage through the Exchange)
- 8.24% under an exemption from the individual mandate (tax penalty for individual who fail to obtain health coverage)
Note that this is a decrease from the affordability percentages for 2019. Public sector employers may need to review their plans and possibly lower their employee contributions for 2020 to meet the adjusted percentages. Download the bulletin for more information.