Affordability Percentages Will Decrease for 2018

On May 5, 2017, the Internal Revenue Service (IRS) issued Revenue Procedure 2017-36 to index the contribution percentages in 2018 for purposes of determining affordability of an employer’s plan under the Affordable Care Act (ACA). For plan years beginning in 2018, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage exceeds:

• 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; and
• 8.05 percent of the employee’s household income for the year, for purposes of an individual mandate exemption (adjusted under separate guidance).

This affordability contribution percentage was adjusted to:

• 9.56 percent for 2015 plan years;
• 9.66 percent for 2016 plan year; and
• 9.69 percent for 2017 plan years.

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