On July 21, 2020, the Internal Revenue Service (IRS) issued Revenue Procedure 2020-36 that provides revised health plan contribution affordability percentages as applicable under the Affordable Care Act (ACA). Under ACA regulations, it is required that health plans offered by applicable large employers (ALEs), employers with 50 or more full time employees, offer affordable, minimum value health coverage to their employees and eligible dependents or face a penalty. For plan years beginning on or after January 1, 2021, employer sponsored group health plans will be considered affordable as long as an employee’s contribution amount for self-only plan coverage does not exceed:
- 83% of the employee’s household income for the year. This pertains to both the pay or play rules and premium tax credit eligibility; and
- 27% of the employee’s household income for the year, for purpose of an individual mandate exemption.
It is important to note that although the individual mandate penalty was reduced to zero in 2019, some individuals may need to claim an exemption for other purposes (e.g., tax credits, etc.)
Contact your Cowden representative for more information on this or other compliance issues.