IRS Releases 2024 ACA Affordability Threshold

2024 ACA Affordability Threshold

The IRS has released a Revenue Procedure, which significantly decreases the affordability threshold for ACA (“Affordable Care Act”) Employer Mandate Purposes (“Pay or Play”) to 8.39% for plan years beginning in 2024.

For reference purposes:

  • 2015 Percentage: 9.56%
  • 2016 Percentage: 9.66%
  • 2017 Percentage: 9.69%
  • 2018 Percentage: 9.56%
  • 2019 Percentage: 9.86%
  • 2020 Percentage: 9.78%
  • 2021 Percentage: 9.83%
  • 2022 Percentage: 9.61%
  • 2023 Percentage: 9.12%
  • 2024 Percentage: 8.39%

The Pay or Play rules only apply to employers considered “Applicable Large Employers” or “ALEs”. In general, ALEs are employers that employee an average of at least 50 full time plus full time equivalent employees on business days in during the preceding year. Under the ACA’s Pay or Play rules, ALEs must offer affordable and adequate coverage to all their full time employees and dependents or face a potential penalty. These affordability thresholds are used in making the affordability determination. Employers that use the exact safe harbor dollar amount to set employee contributions will need to reduce the current employee contribution for the lowest-cost, self only-option for the 2024 plan year.

Please contact your account manager or your broker if you have questions regarding your status as an ALE or the applicability of the ACA Pay or Play rules to your group.