ACA Affordability Threshold Decreases

On July 25, 2022, the IRS announced that the Affordable Care Act’s (ACA) affordability threshold will be 9.12 percent, reduced from 9.61 in 2022, for plan years beginning in calendar year 2023 (after December 31, 2022). Under the ACA’s Employer Shared Responsibility provision (Play or Pay), large employers (those with an average of 50 full-time employees—including full-time equivalent employees— during the prior year) must either:

  • Offer most full-time employees, and their children, minimum essential, minimum value coverage that is affordable at the employee-only level of coverage; or 
  • Make an employer shared responsibility payment to the IRS if at least one of their full-time employees purchases coverage on a Health Insurance Marketplace and receives a premium tax credit because their employer did not offer qualifying coverage.

Under the new threshold, to be affordable for 2023, the employee’s required contribution to the plan can’t be more than 9.12 percent of the employee’s income. 

Read more about affordability and minimum value on the agency’s Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act page.

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