The IRS published Revenue Procedure 2018-34 announcing the affordability percentage measure for plan years beginning after calendar year 2018. The new amount is 9.86%.
This new amount is an increase from the 2018 affordability percentage of 9.56%. Affordability was pegged at 9.69% in 2017.
Employers who are applicable large employers (ALEs) use the affordability percentage to ensure that employer-sponsored coverage is “affordable” and thereby avoid the ACA’s employer penalty. A simplified example of affordability is shown below:
Year Affordability % Annual W-2 Affordability Max. Contribution
2017 9.69% $45,000 $4360.50 $363.38
2018 9.56% $45,000 $4302.00 $358.50
2019 9.86% $45,000 $4437.00 $369.75
The IRS Revenue Procedure announcing the 2019 affordability measure is here.
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