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Pay or Play Affordability Percentage Decreased

affordability percentage

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The IRS issued Revenue Procedure 2022-34 to update the contribution percentage in 2023 for determining the affordability of an employer’s plan under the Affordable Care Act.

For plan years beginning in 2023, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

  • 9.12% under the pay or play rules
  • 9.12% under the premium tax credit eligibility rules
  • 8.17% under an exemption from the individual mandate

The updated affordability percentage for the pay or play rules and premium tax credit is the most significant decrease since the rules were implemented. The affordability percentage for the individual mandate exemption increased slightly from 2022.

The updated percentages are effective for plan years beginning January 1, 2023. Employers may need to substantially lower their employee contributions for 2023 to meet the adjusted percentage.

Download the bulletin for more details.

Download the 2022 IRS Contribution Limits Info Sheet

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Rick Labian

Rick Labian

Rick Labian lives by the Golden Rule – he is guided by what is best for his clients and treats others as he would like to be treated. Rick acts as an advisor and advocate for his clients, helping to identify goals for their benefit programs and building a strategic plan together. Rick has a rich history with NIS. He has worked for NIS for over 20 years, leading the Eastern region. Rick is the manager and leads the FBC Client Management Team. Rick’s leadership and experience aids our internal staff and all of NIS’ FBC clients. Rick is a licensed insurance agent and is ACA certified through the National Association of Health Underwriters.