IRS lowers ACA affordability threshold for premium tax credit

Employee-only contribution can’t exceed 9.56% of household income

The IRS recently lowered the 2018 affordability threshold to 9.56% of household income for purposes of determining eligibility for a premium tax credit. The 2017 rate was 9.69% of household income. This percentage is also used to determine the affordability of employer-sponsored coverage. Failure to provide a full-time employee with affordable coverage can result in an employer shared responsibility penalty.

Additionally, the IRS lowered the percent of income to 8.05% to determine eligiblity for a 2018 exemption from the individual shared responsibility payment (down from 8.16% for 2017).

Year

Affordability %

Maximum Monthly Contribution*

Prior Year Federal Poverty Level (FPL)

2018

9.56%

$96.08

$12,060

2017

9.69%

$95.93

$11,880

2016

9.66%

$94.75

$11,770

* Based on Federal Poverty Level (FPL) affordability safe harbor.

As always, we appreciate your business.

News Type: 
Compliance Corner