The ACA’s employer shared responsibility or “pay or play” rules require applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time equivalent employees (and dependents) or pay a penalty. The affordability of health coverage is a key point in determining whether an ALE will be subject to a penalty.
Employer-sponsored coverage is considered affordable if the employee’s required contribution for self-only coverage does not exceed a percent of the employee’s household income for the tax year. This affordability contribution percentage is adjusted annually:
  • 9.56% for 2015 plan years
  • 9.66% for 2016 plan years
  • 9.69% for 2017 plan years
  • For 2018 the affordability contribution percentage decreases to 9.56%
The 2018 updated affordability percentage is effective for taxable years and plan years beginning on or after January 1, 2018. This is the first time since these rules were implemented that the affordability contribution percentages have been reduced. As a result, some employers may need to reduce employee contributions for 2018 to meet the adjusted percentage.
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