The Internal Revenue Service (IRS) has made a significant adjustment to the Affordable Care Act (ACA) affordability percentage for 2024, lowering it to 8.39%. This considerable change means the minimum set percentage used to determine whether an applicable large employer’s (ALE) lowest-premium health plan is in line with the ACA affordability mandate has been reduced.
The new percentage means that ALEs will need to reassess their health plans to ensure they continue to adhere to the ACA’s requirements for affordability. The affordability test is calculated by comparing the employee’s Household Income to the cost of the employer’s lowest cost self-only health coverage that provides minimum value. If that cost does not exceed 8.39% of the employee’s Household Income, the plan is considered affordable for the year 2024.
This move by the IRS is an important one, as it signifies a recognition of the financial pressures faced by many households. It also throws a spotlight on the importance of providing affordable health care options to employees during these testing times.
For corporations and big law firms alike, this development necessitates careful review of their current health plan offerings. Businesses will need to ensure the implementation of requisite changes to stay compliant with the ACA requirements. Going forward, this reduction might also have implications for health plan strategies at organizations.
For full details, the original article posted by Williams Mullen is available for reading here.