In Rev. Proc. 2018-34, the IRS issued the indexed affordability percentages relevant to applicable large employers (ALEs) who must offer minimum essential coverage meeting certain requirements to fulltime employees and their dependents or risk exposure to employer shared responsibility penalties. In 2019, such coverage will be deemed “affordable” if the employee required contribution for self-only coverage providing minimum value does not exceed 9.86% of the employee’s household income (an increase from 9.56% in 2018).
As a reminder, ALEs may rely on one of three affordability safe harbors to determine whether the coverage it offers to full-time employees satisfies the affordability requirements under the IRS employer shared responsibility regulations. These affordability safe harbors include the Form W-2, Rate of Pay, and Federal Poverty Line (FPL) safe harbors. Because the IRS is now enforcing employer shared responsibility penalties for the 2015 tax year and appears poised to continue future enforcement efforts, it is important now, more than ever, that ALEs understand how to determine whether they offer affordable coverage, as well as whether they are complying with all other employer shared responsibility requirements.
The employer shares responsibility penalty amounts are also indexed, but the IRS has not yet released the indexed amounts for 2019. ETC will continue to monitor the release of those indexed penalties, as well as any other developments related to the employer shared responsibility requirements, and provide our valued clients with the latest information.