ACA Affordability Percentage Decreases to 8.39% for 2024

The Affordable Care Act (ACA) affordability percentage for 2024 has been decreased to 8.39% of the employee’s household income. Applicable large employers (ALEs), employers with 50 or more full-time employees, need to actively review their contribution structures and be aware of any penalties.

What does this change mean for ALEs?

ALEs must offer affordable health coverage that meets the affordability requirement. The affordability percentage is used to determine what threshold is considered affordable for employees. The decrease in percentage means the amount an employee may need to pay for coverage will go down in 2024. Employers will need to pay most of the cost of coverage for the foreseeable future or until insurance rates decrease.

ALEs should review their contribution structures for the 2024 plan year and may need to increase employer contributions. Non-compliance with the affordability threshold could lead to IRS-assessed penalties.

To learn more about the changes to the affordability percentage for the 2024 plan years visit https://www.irs.gov/pub/irs-drop/rp-23-29.pdf.