Employer Mandate: Part 3 Sneak Peek
We will do a deep dive into what kind of medical coverage must be offered to avoid potential employer mandate penalties in Part 3 of our Affordable Care Act (ACA) Employer Mandate series. On July 23, 2019, the IRS released Revenue Procedure 2019-29, updating the ALEM’s required contribution percentage for affordability for plan years beginning on January 1, 2020 through plan years beginning on December 1, 2020.
Plan year beginning on or after |
Section 4980H(a) Annual Penalty |
Section 4980H(b) Annual Penalty |
Employer Affordability Safe Harbor |
January 1, 2019 |
$2,500 |
$3,750 |
9.86 % |
January 1, 2020 |
$2,580 (projected) |
$3,870 (projected) |
9.78 % |
Impact of Updates
For applicable large employers (as defined by the ACA) planning their 2020 contribution strategy, the affordability percentage is declining to 9.78% from 2019’s indexed value of 9.86%. This means employers will be responsible for more of the employee-only premium for the 2020 plan year if pursuing a strategy to minimize potential employer mandate penalties
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