Change in 2018 ACA Affordability Percentage | July 27, 2017

Dan Kuperstein

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The IRS recently issued Revenue Procedure 2017-36, which provides 2018 indexing adjustments for two key percentages under the Affordable Care Act. ERISA Attorney Dan Kuperstein explains the percentages and what you need to do to continue to comply for 2018.

Resources:
IRS Revenue Procedure 2017-36
ACA(now) – News on Washington

 

Video Transcript: 
Hi, I’m Dan Kuperstein, and welcome to this episode of ComplianceMINUTE.

The IRS recently issued Revenue Procedure 2017-36, which provides 2018 indexing adjustments for two key percentages under the Affordable Care Act (or ACA). One of these percentages is used to determine the amount individuals eligible for premium tax credits must contribute toward the cost of Exchange coverage. This adjusted percentage generally ranges from approximately 2 to 9.5%, and generally, has a very small impact on employers.

The other percentage is more significant to employers – it is the required contribution percentage used to determine whether employer-sponsored health coverage is “affordable” for purposes of the ACA’s employer shared responsibility provisions (or the provisions commonly referred to as the Employer Mandate or Pay or Play).

This percentage had increased from its initial 9.5% baseline to 9.69% for 2017, and now, under this new Revenue Procedure, will decrease to 9.56% for 2018. This is significant because it is the first time in the ACA’s history that this affordability percentage has gone down.

What are the key takeaways here for employers?
Well, adjustments to the affordability percentage are important to employers since failure to offer affordable coverage to full-time employees may result in Pay or Play penalties that can be significant, and so it’s essential to get this percentage right.

Even though there has been a lot of publicity and attention in the news to a possible ACA replacement bill, the ACA remains the law of the land, and to be safe, employers should still continue to prepare for 2018, and to test their employees’ contributions to see if they’re affordable under the ACA.

For more information on this and other ACA topics, visit our Knowledge Center at corpsyn.com. Thank you.