Under the ACA, employees (and their family members) who are eligible for coverage under an affordable employer-sponsored plan are generally not eligible for the premium tax credit. The ACA provides that employer-sponsored coverage is considered affordable if the employee’s required contribution for self-only coverage does not exceed a specific percentage of the employee’s household income for the tax year.
The IRS has announced adjustments to the required contribution percentages that will be used in 2018. For the first time since these rules were implemented, the affordability contribution percentages have been reduced.
For plan years beginning in 2018, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.56 percent of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility.
For 2017 plan years, the percentage is 9.69%.
We hope that you find this information helpful. For additional details, we encourage our clients to log-in to the CBGconnect portal to download our Compliance Bulletin about this topic. You may also call our team at 781-759-1222 for more information.