Staying updated with IRS regulations is vital for HR professionals to ensure compliance in offering affordable health coverage. The IRS recently announced the 2024 affordability percentage, marking an important change in the landscape of employee benefits. Let's explore the details of this update, its implications for employers, and the availability of BAS’ ACA data collection and reporting services.
2024 Affordability Percentage: Key Highlights
The IRS released the 2024 required contribution percentage used to determine if employer-sponsored health coverage is “affordable” for purposes of employer shared responsibility under Code § 4980H. In the 2024 calendar year, the cost for single-only coverage may not exceed 8.39% of an employee's household income for the coverage to be considered affordable. This update is a decrease from the 2023 percentage of 9.12%. The IRS recalibrates the affordability percentage annually to reflect current economic conditions with the baseline percentage starting at 9.5%.
Affordability for Applicable Large Employers (ALEs)
Applicable Large Employers, defined as those with 50 or more full-time employees in the previous year, are obligated to provide minimum essential coverage that is both affordable and offers minimum value to their full-time employees.
Understanding ACA Affordability Safe Harbors
Employers rely on ACA affordability safe harbors to ascertain if their plans meet affordability criteria. These safe harbors offer three calculation methods for determining affordability:
- W-2 Safe Harbor: The offer of coverage is deemed affordable if the employee's required contribution for the employer's lowest cost single-only coverage, providing minimum value, doesn't exceed 8.39% of their Form W-2 wages.
- Rate of Pay Safe Harbor: Affordability is met if the employee's contribution for the employer's lowest cost single-only coverage, providing minimum value, remains below 8.39% of their monthly salary.
- Federal Poverty Line (FPL) Safe Harbor: The offer of coverage is considered affordable if the employee's required contribution doesn't exceed 8.39% of the monthly Federal Poverty Line for a single individual. With the decrease in the affordability percentage, an employer using this safe harbor will have to charge an employee-only premium of $101.93 or less.
BAS' ACA Data Collection and Reporting Services
To assist HR professionals in navigating the complexities of ACA data collection and reporting, BAS offers specialized services. Ensuring accuracy in data collection and reporting is essential to avoid penalties and maintain compliance.
Embracing Compliance for a Secure Future
Understanding the IRS's 2024 affordability percentage and its implications is crucial for HR professionals seeking to provide employees with affordable health coverage. By leveraging ACA affordability safe harbors and expert services like BAS' ACA data collection and reporting, businesses can navigate the regulatory landscape confidently and ensure a secure future for their workforce.
For comprehensive ACA data collection and reporting services, reach out to your dedicated account manager or contact solutions@basusa.com. Stay compliant and informed with BAS by your side.
Benefit Allocation Systems (BAS) provides best-in class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
