Percentage Down from 2017
Under the employer shared responsibility (“pay or play”) provisions of the Affordable Care Act, applicable large employers—generally those who had 50 or more full-time employees (including full-time equivalent employees) in 2017—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees (and their dependents) in 2018. As a reminder, for plan years beginning in 2018, coverage will generally be considered affordable if the employee’s required contribution for the lowest cost self-only health plan is 9.56% or less of his or her household income for the taxable year. For plan years beginning in 2017, the applicable percentage was 9.69%.
Given that employers are unlikely to know an employee’s household income, they may use a number of safe harbors to determine affordability, including reliance on Form W-2 wages. Click here for more information on these safe harbors.