In a recent Notice the IRS announced the significantly decreased percentage that will be used to determine whether employees’ share of their 2023 premiums are considered affordable for purposes of the employer mandate. Applicable Large Employers, for the 2023 plan year, will need to apply the threshold of 9.12% (down from 9.61% for 2022) to any of three “safe harbors”:
• W-2 wages
• Rate of pay
• Federal poverty level
Knowing what the affordability percentage is will help employers better prepare for health plan changes and contributions in order to better avoid penalties.