IRS Updates Health Coverage Affordability Calculation for 2024
Published August 24, 2023
The Internal Revenue Service (IRS) has issued Revenue Procedure 2023-29
providing the indexing adjustment for the required contribution
percentage. For plan years beginning in 2024, the required contribution
percentage is 8.39%, down from 9.12% in 2023.
The
affordability calculation can determine whether an individual can
afford employer-sponsored health coverage and affect whether the
individual would be eligible for a premium tax credit on the health
insurance exchanges. This could affect employers that do not use a safe
harbor method to determine whether the coverage they offer is affordable
to employees.
For plan years beginning in
2024, employer-provided coverage is considered affordable for an
employee if the employee required contribution is no more than 8.39% of
that employee’s household income. Because applicable large employers
generally do not know their employees’ household incomes, there are
three safe harbor methods for calculating affordability.