New 2019 ACA Affordability Rates Give Employers a Break
On May 21, 2019, the IRS issued the new affordability rates for determining compliance with the ACA’s affordable coverage requirements. For plan years starting in 2019, the new affordability rate will be 9.86% of an employee’s household income for both the pay or play guidelines and premium tax credit eligibility.
The .30% increase from 2018’s affordability rate (9.56%) is the largest increase since the ACA became law in 2012.
From an employer’s standpoint, this gives some added cushion in setting employee contribution rates for their lowest cost single-coverage health plans. For employers that are using the Federal Poverty Line affordability safe harbor to determine their plan meets affordability requirements, the maximum employee contribution will increase in 2019 from $96.08 per month to $99.75 per month.
| Year | FPL | Affordability Percentage | Maximum Employee Monthly Contribution |
| 2015 | $11,670 | 9.5% | $92.97 |
| 2016 | $11,770 | 9.56% | $94.75 |
| 2017 | $11,880 | 9.69% | $95.93 |
| 2018 | $12,060 | 9.56% | $96.08 |
| 2019 | $12,140 | 9.86% | $99.75 |
The affordability rate increase is a trend change to last year’s affordability decrease.
What does this mean for employers?
Starting in 2019, for employers using the FPL safe harbor, you will be able to increase employee monthly contributions for your employees lowest cost single-coverage health plans by $3.67.
For employers using the W2 safe harbor, plans that have employees contributing $82.17 or less per month for every $10,000 in W2 wages will meet minimum affordability levels. It was $79.67 per month for every $10,000 in W2 wages in 2018. This is a difference from 2018 affordability minimum to 2019 of roughly $30 pe employee per year for every $10,000 of W2 wages.
In other words, affordable coverage for an employee earning $40,000 a year will cost an employer $120 less in 2019 than in 2018.
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About Benetech Benefits and HCM
Benetech is a business administration and management firm specializing in employee benefits and human capital management. Located outside of Albany, NY Benetech helps mid-market employers simplify employee benefits and HCM through a unified service team and integrated technology.
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