Decreased Affordability Under the ACA – Will you be compliant in 2024?
In Rev. Proc. 2023-29, recently issued by the Internal Revenue Service, the affordability percentage for Affordable Care Act plans has been set at 8.39% beginning in 2024. This marks a significant decrease from the previous 9.12% applicable for 2023. This is the lowest percentage since the inception of the employer mandate which means these plans will cost employers more.
Under the Affordable Care Act (ACA), large employers – those with fifty (50) or more full-time-equivalent employees- are required to provide affordable, minimum value group health plan coverage to their full-time employees. Affordability is gauged by the premium cost of the least expensive, minimum value plan available to employees relative to the employees pay. Every year, the affordability test is set at a percentage of employees’ earnings. In 2024, the new affordability test is 8.39%.
Given that open enrollment for calendar year plans is imminent, applicable large employers should take prompt action to ensure their offerings for 2024 comply with the new affordability mandate.