HR professionals should take note of IRS Revenue Procedure 2023-29, as it signifies a significant development regarding Affordable Care Act (ACA) compliance. The ACA's affordability threshold for 2024 has been lowered to 8.39%, down from 9.12% in 2023.
This adjustment holds substantial implications for employers subject to the ACA employer mandate. It potentially reduces the minimum cost at which a self-only coverage option must be accessible within a group health plan to avoid potential penalties for the employer.
HR teams must proactively assess cost-sharing arrangements and consider adjustments to cost designs for the upcoming 2024 plan year to ensure compliance with the revised threshold.
ACA Safe Harbor
- Federal Poverty Line Safe Harbor: Employers using the FPL safe harbor to determine affordability should note that the premium for single only coverage must be $101.94/month or less for employees in 2024. This is a decrease from the $103.28/month in 2023.
- Rate of Pay: Employers using the Rate of Pay safe harbor will use a calculation taking into account 8.39% of monthly wages. This is a decrease from 2023.
- W-2: For 2024, the maximum contribution is 8.39% of W-2 wages.
This adjustment necessitates a careful review of premium cost-sharing structures to ensure compliance with the revised ACA affordability threshold for the 2024 plan year. Not raising employee cost-sharing in 2024 may not be enough to avoid ACA penalties. Stay informed to avoid potential penalties and maintain legal compliance.
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