The IRS announced a change to the ACA affordability threshold for 2019.
The percentage used to determine if employer-provided health coverage is affordable has increased to 9.89% for 2019. In 2018, the percentage is 9.56%. An employer that does not offer full-time employees affordable health coverage providing minimum value will be subject to employer shared responsibility penalties.
There are three recognized affordability safe harbors and all will use 9.89% in 2019 to determine if the safe harbor is satisfied.
- W-2 Safe Harbor. An employer’s offer of coverage is affordable if the employee’s contribution for the lowest-cost self-only coverage does not exceed 9.89% of the employee’s Form W-2 wages.
- Rate of Pay Safe Harbor. An offer of coverage is affordable if the employee’s required contribution for the month for the lowest-cost self-only coverage does not exceed 9.89% of the employee’s rate of pay (x130 hours or monthly salary).
- Federal Poverty Line Safe Harbor. An employer’s offer of coverage is affordable if the employee’s required contribution for the lowest-cost self-only coverage does not exceed 9.89%of the monthly federal poverty line for a single individual. An employee’s monthly cost must not be greater than $99.75 to meet the federal poverty line safe harbor.
