The 2021 Affordability Safe Harbor

The 2021 Affordability Safe Harbor

In a recent Notice the IRS announced the adjusted percentage that will be used to determine whether employees' share of their 2021 premiums are considered affordable for purposes of the employer mandate. Applicable Large Employers, for the 2021 plan year, will need to apply the threshold of 9.83% (up from 9.78% for 2020) to any of three “safe harbors”:

•             W-2 wages

•             Rate of pay

•             Federal poverty level

The IRS adjusted percentage for the 2019 plan year was 9.86% and for the 2018 plan year it was 9.56%.  For more information and prior year thresholds click here.

Knowing what the affordability percentage is will help employers better prepare for health plan changes and contributions in order to better avoid penalties.