ACA Affordability Rate for 2019

Recently the IRS released the new affordability rate for 2019.  The IRS has increased the safe harbor percentage to measure for affordability according to the ACA employer mandate from 9.56% to 9.86%.   The ACA employer mandate or “pay-to-play” is the legislation that requires that all ALEs (Applicable Large Employers – 50 or more full-time or full-time equivalent employees) offer affordable insurance to their employees.   For example, an employee that earns an annual income of $40,000.00 should not pay more than 9.86% of their income for health insurance, which would be $3,944.00 annually or approximately $328.00 per month, to be considered affordable according the ACA W2 Safe Harbor. This increase could be in response to the rising premiums that are predicted for 2019.  While the individual mandate was repealed in 2018, the employer mandate is still in effect.  Thus, employers and insurers are required to report to the IRS on Forms 1095-C & 1095-B, respectively, to be compliant with the law or face the possibility of hefty penalties.