07/30/2019

ACA Affordability Threshold Lowered For 2020

The threshold has been lowered to 9.78 percent for 2020

Employer-sponsored health coverage will satisfy the Affordable Care Act (ACA) affordability requirement in 2020 if the lowest-cost, self-only coverage option available to employees does not exceed 9.78 percent of an employee's household income. This limit is down from 9.86 percent in 2019.

The Internal Revenue Service (IRS) announced the 2020 shared-responsibility affordability percentage on July 22 in Revenue Procedure 2019-29. Employees' maximum contribution percentage is adjusted annually by considering the ratio of premium growth to income growth in the preceding calendar year. 

Employers should not overlook the annual inflation-adjusted shift in cost-sharing limits for group health plan coverage, as they could face steep penalties for failing to provide affordable coverage under the ACA's shared-responsibility provisions.

Please select this link to read the complete article from The Society of Human Resource Management.