On May 21, 2018, the IRS announced that the affordability percentage under the Affordable Care Act’s play or pay rules will increase to 9.86% for 2019 plan years. This is an increase from 9.56% for 2018 plan years.
By way of background, the ACA’s employer shared responsibility provision – often called the employer mandate or “play or pay” – requires large employers to offer health coverage to their full-time employees or face a potential penalty. (Employers with fewer than 50 full-time and full-time equivalent employees are exempt.) Large employers can avoid the risk of any play or pay penalties by offering all full-time employees at least one group health plan option that meets two standards: it provides minimum value and it is affordable.
Minimum value means the plan’s share of total allowed costs is at least 60% and the plan provides substantial coverage of physician services and inpatient hospital services.
Affordable means the employee’s required contribution (payroll deduction) for self-only coverage, if elected, does not exceed a certain percentage of the employee’s income. The affordability percentage changes slightly each year based on the law’s indexing rule. The percentage is 9.56% for 2018 plan years and it will increase to 9.86% for 2019 plan years.
Originally published by www.thinkhr.com