e-Alerts

REGULATORY UPDATE: ACA Affordability Threshold Decreases for 2023

By August 23, 2022 No Comments

Employers who are Applicable Large Employers (ALEs) under the Affordable Care Act (ACA) should take note of an important announcement that was made by the IRS on August 1, 2022. In Notice 2022-34, the IRS announced the new affordability benchmark for plans renewing on or after January 1, 2023.

Previous changes have been incremental and have generally trended upward, which allows employers to collect a larger employee contribution from employees while meeting the contribution requirements under the ACA’s employer shared responsibility rules. However, for 2023 the threshold for employee contributions has decreased significantly, which will have an impact on some employers.

For plan years beginning in 2023, the IRS has announced that coverage will be considered affordable if the employee’s required contribution for the lowest cost self-only health plan offered is 9.12% or less of his or her household income for the taxable year. This is a decrease of roughly 5% from the current threshold of 9.61% and is the first time the affordability benchmark has fallen below the initial rate of 9.5%. As a result, ALEs will be required to make a larger contribution to the cost of employee-only coverage for their lowest-cost plan to ensure affordability.

Employer Next Steps

  • Please contact the Benefit Support Team if you have any questions about the ACA affordability requirement and its impact on your plan.
The People Simplifying HR

For almost twenty years, HR Knowledge has made it our mission to demystify the complex and daunting process of HR management. We do more than just provide the level of service and technology you’d expect from an industry leader. We combine an unparalleled passion for service with our decades of HR, payroll, and benefits experience to provide our clients with personalized and actionable advice that is second–to–none. From managed payroll to employee benefits to HR support, we can help your organization thrive, grow, and reduce operating costs—no matter what industry you serve. Whether you’re interested in our Full-Service solution or just need your employee handbook written, HR Knowledge can help you minimize risk while staying on top of compliance regulations. The bottom line? We’re not just another cloud-based technology company that also does HR, #WeAreHR. Get the scoop on how we can help you simplify HR.

This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.

 

DOWNLOAD PDF