Advocacy News – Aug. 10, 2022
The IRS announced that employer-sponsored health coverage will satisfy the Affordable Care Act (ACA) affordability requirements in 2023 if the lowest-cost, self-only coverage option an employer offers does not exceed 9.12% of the employee’s household income for the year for purposes of both the pay or play rules and premium tax credit eligibility. The 2022 percentage was 9.61%.
This is the most substantial decrease in the percentage since these rules were implemented, meaning some employers may have to substantially lower their employee contributions for 2023 to meet the adjusted percentage. The threshold, also known as the shared responsibility affordability percentage or cost-sharing limit, is adjusted annually by the IRS based on the rate of premium growth for the preceding year over the rate of Consumer Price Index (CPI) growth.
Because businesses can face steep penalties for failing to provide affordable coverage under the ACA’s shared-responsibility provisions, companies with questions about employee contributions and the affordability provisions should consult with their insurance agent or carrier.