2020 Employer Affordability Safe Harbor

September 19, 2019

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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