IRS Announces ACA Affordability Contribution Percentage for 2023

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The IRS announced a decrease in the ACA Affordability Contribution Rate from 9.61 in 2022 to 9.12 percent for the 2023 plan year, the most significant decrease since the ACA’s commencement. Under the ACA, Applicable Large Employers (ALEs), employers with 50 or more full time and/or full-time equivalent employees, are required to offer affordable minimum value coverage to all full-time employees and their dependents. The contribution percentage is used to determine whether the employer-sponsored health coverage is “affordable” under the ACA’s employer shared responsibility provisions. A plan will be considered affordable under the ACA if the employee’s contribution level for self-only coverage does not exceed the specified percentage of the employee’s household income. Failure to offer affordable coverage may result in employer shared responsibility penalties, which can be substantial. The IRS recognizes that it is difficult for an employer to determine an employee’s household income, so employers are able to use one of three “safe harbors” to ensure the affordability threshold is met: Rate of Pay, W-2 or Federal Poverty Level (FPL).

As open enrollment season quickly approaches for many employers, it’s important to be mindful of this decrease to ensure their health plan is affordable under the ACA. Should you have any additional questions, please reach out to your Account Teams.

2022 Employer Compliance Calendar

Are you finding it difficult to keep up with the constant changes in the compliance landscape? We understand that HR professionals have other important items on their plate so we have put together a 17 page calendar that will insure employers are meeting deadlines to remain compliant in the workplace. Click below to download our calendar!

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