The TY25 AFFORDABILITY THRESHOLD for calculating employer ACA compliance has been increased to 9.02% of the employee’s household income.

This move by the IRS follows three years of decreases — from 9.83% in 2021 down to 8.39% for the current TY 2024.

The increased threshold will take some of the budgetary pressure off the health cover premiums that APPLICABLE LARGE EMPLOYERS [ALEs] are required to offer their full-time employees under the ACA EMPLOYER MANDATE, also known as the Employer Shared Responsibility Provisions.

In sum, ACA compliance requires cover offers to provide Minimum Essential Coverage [MEC] that is both Affordable and meets Minimum Value [MV] expectations. A definitive overview of these provisions is provided in ACA CENTRAL here.

HOW TO CALCULATE AFFORDABILITY
Different SAFE HARBOR methods are available to employers for calculating offer affordability; and these are explained here in BENEFITSCAPE ACA CENTRAL.

» Using the Federal Poverty Level [FPL] SAFE HARBOR method as an example, the 9.02% AFFORDABILITY THRESHOLD means premiums for TY25 must be under $1,358.41 for the year or $113.20 for the month [based on an EPL of $15,060 and a single person household].

WHAT TO DO NEXT?
TY24 ACA reporting will soon be on us. Now is the best time not only to set in motion your TY24 reporting process but to plan ahead for TY25, insuring your organization’s healthcare plans and cover offers will be compliant with the latest IRS regulations, including updated AFFORDABILITY THRESHOLDS.

BENEFITSCAPE is the leading specialist in ACA COMPLIANCE. For 1000s of employers of all sizes, in all states, across all sectors, and on every major HCM, we deliver 100% compliant and on-time ACA reporting, saving them time, costly errors, and expensive resources. Talk to BENEFITSCAPE about all aspects of ACA COMPLIANCE & REPORTING on your HCM.