Applicable Large Employers, those with 50 or more full-time employees in the prior year, must offer their full-time employees minimum essential coverage providing minimum value that is affordable. A plan is affordable if the premium for self-only coverage does not exceed a certain percentage of the employee’s household income. The IRS sets the percentage each year. The baseline percentage was 9.5%. In 2022, the affordability percentage is 9.61%. In 2021, it was 9.83%.
A plan will be considered affordable if its premium for the lowest cost, single-only plan does not exceed the identified percentage of an employee’s household income. Since household income is not readily available, employers use one of the three ACA affordability safe harbors to determine if their plans are affordable: W-2 Safe Harbor, Rate of Pay Safe Harbor, and Federal Poverty Line (FPL) Safe Harbor.
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As always, please contact your Total Benefit Solutions Inc health insurance specialists about any questions or concerns at (215)355-2121.