On Nov. 21, 2014, the IRS and HHS released information regarding the the Affordable Care Act’s affordability contribution percentage for 2016.
The affordability of health coverage is a key point in determining whether an employer will be subject to a penalty under the laws of Health Care Reform. The “pay or play” rules generally determine affordability of employer-sponsored coverage by reference to the rules for determining premium tax credit eligibility.
Here is a brief summary of what was released regarding 2016:
- The updated affordability percentages are effective for taxable years and plan years beginning after Dec. 31, 2015.
- For plan years beginning in 2016, employer-sponsored coverage will generally be considered affordable under both the “pay or play” rules and the premium tax credit eligibility rules if the employee’s required contribution for self-only coverage does not exceed 9.66 percent of the employee’s household income for the year.
- However, employers using an affordability safe harbor under the pay or play rules will continue using a contribution percentage of 9.5 percent to measure their plan’s affordability.
- Regarding the individual mandate exemption, for plan years beginning in 2016, coverage is unaffordable if it exceeds 8.13 percent of household income.
Additional Information
I hope that you find this brief summary helpful.
Please contact the CBG Benefits team for more information on how your company may remain in compliance with the Affordable Care Act. You may reach us by phone at 781-759-1222 or via email at info@CBGBenefits.com.