Tip Tuesday - ACA’s Affordability Contribution Percentage Increases for 2017

On April 12, 2016, the Internal Revenue Service (IRS) released new guidance on the percentages used to determine what is considered “affordable” health coverage.

Under the Affordable Care Act (ACA), the affordability of an employer’s plan may be assessed for the employer shared responsibility penalty, the individual mandate and the premium tax credit. The affordability test varies for each provision.

For plan years beginning in 2017, the ACA’s affordability contribution percentages will be adjusted to the following percentages:

  • 9.69 percent under the employer shared responsibility rules (up from 9.66 percent in 2016). The shared responsibility rules, or pay or play rules, require applicable large employers (those that employ 50 full-time employees or full-time equivalents) to offer coverage that does not exceed 9.69 percent of an employee’s household income for the year.
  • 9.69 percent under the premium tax credit eligibility rules (up from 9.66 percent in 2016). If employees’ required contributions exceed 9.69 percent, those employees could be eligible for a premium tax credit through the Marketplace.
  • 8.16 percent under an exemption from the individual mandate (up from 8.13 percent in 2016). Individuals that lack access to affordable, minimum value coverage are exempt from the individual mandate.

Failing to meet any of these requirements could trigger significant financial penalties for your business. Remember that these percentages only apply to self-only coverage, and do not include any additional costs for family coverage. These new percentages are effective for taxable years and plan years beginning after Dec. 31, 2016.

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TSG Financial LLC is a Financial Services company located in Garden City, NY. Securities offered through Securities America, Inc. Member FINRA (www.finra.org)/SIPC (www.sipc.org). Advisory services offered through Securities America Advisors, Inc. TSG Financial and Securities America are separate entities. Securities licensed in: AZ, CA, CO, CT, DE, FL, GA, IL, IN, IA, KS, LA, MD, MA, NJ, NY, NC, OH, OR, PA, SC, TX, UT, VA, DC . The third-party comments displayed are not verified, may not be accurate and are not necessarily representative of our client experience.

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