The IRS has significantly lowered the affordability threshold for the ACA employer mandate.

Revenue Procedure 2023-29, issued on August 23, 2023, by the Internal Revenue Service (IRS), significantly decreases the affordability threshold for Affordable Care Act (ACA) employer mandate purposes to 8.39% for plan years beginning in Tax Year 2024. The new 8.39% level marks the lowest affordability percentage to date. The ACA’s affordability requirement is calculated as the highest percentage of household income an employee can be required to pay for monthly health insurance plan premiums, based on the least expensive employer-sponsored plan offered that meets the ACA’s minimum essential coverage requirements.

The standard threshold was set by the ACA as 9.5% initially, meaning that an employee’s required contribution to an employer plan doesn’t exceed that 8.39% of income. The ACA’s affordability percentage decrease is based on the index inflation metric, which is reached by computing the rate of premium growth for the preceding year over the rate of Consumer Price Index (CPI) growth for the preceding year. 

The historical breakdown follows:

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%

Applicable Large Employers, with 50 or more full-time equivalent employees, must adhere to the ACA requirements and thus, should collaborate with their insurance carriers to ensure compliance with the new lower affordability threshold.

SPS/GZ is a full-service tax reporting and stock plan administration firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to business clients of all sizes. We offer complimentary TIN-Matching services to help reduce errors prior to reporting. In addition to a thorough review of client data specifically looking for penalty triggers, we provide year-round support for our clients, including post-filing assistance and comprehensive ACA support for responses and resolutions of ACA penalties to employers and entities of all sizes and whether or not they used SPS/GZ for the initial reporting of Forms 1095-C, 1095-B, 1094-C, and 1094-B. 

Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few simple steps and we handle everything else to keep your organization compliant. Contact us today at or call at (888)375-3049. 

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