A double whammy for 2023 affects employer efforts to avoid potential ACA penalties

Two events occurred in 2022 that will affect employer efforts to avoid Affordable Care Act (ACA) employer mandate penalties in 2023: (1) The IRS set the 2023 affordability safe harbor percentage for employer-provided medical coverage to 9.12%; and (2) the Inflation Reduction Act of 2022 extended the enhanced public health insurance marketplace (“Marketplace”) subsidies originally enacted under the American Rescue Plan Act of 2021.

This Alert provides: (i) A summary of the ACA’s employer mandate penalties; (ii) the employer affordability safe harbors and the effect of the 9.12% affordability safe harbor percentage when setting employee contributions for 2023 plan years; and (iii) the potential effect of the extension to the enhanced Marketplace subsidies.