The Internal Revenue Service (IRS) announced on August 23, through Rev. Proc. 2023-29, that the Affordable Care Act (ACA) affordability threshold for plan years beginning in 2024 will considerably drop to 8.39% from the 9.12% set for plan year 2023. This denotes the most significant year-over-year shift in affordability thresholds thus far. Importantly, the affordability threshold is the indicator used in determining if employer-provided health coverage is affordable under the ACA. Bass, Berry & Sims PLC
For legal professionals involved in advising global institutions on their health coverage policies, this recent trend is crucial to note. A decreasing ACA affordability threshold could potentially mean changes in employee contributions, rethinking employer health benefits strategies or navigating the potential legal implications of the ACA compliance.
- The reduction in the ACA affordability threshold generally results in a decrease in the maximum amount that an employee has to contribute to an employer-sponsored health plan effectively without facing a penalty.
- Companies should assess their current health benefits structure and consider modifying their strategies to ensure they adhere to this new affordability threshold. The strict compliance with the affordability requirements of the ACA could help avoid potential associated penalties.
- Legal teams should be prepared to guide their organizations in implementing and communicating these changes, while adhering to the complex legal landscape of healthcare.
With open enrollment around the corner and these ACA changes set to take place in the near future, it’s critical for law professionals and their respective corporations to understand these shifts and plan accordingly. This significant change in the ACA affordability threshold emphasizes the crucial role of legal teams in ensuring and maintaining ACA compliance within large corporations and firms.