IRS Releases 2024 ACA Affordability and Premium Tax Credit Determinations Indexing Adjustments

The Internal Revenue Service (IRS) has released 2024 indexing adjustments to the Affordable Care Act (ACA) percentages. These percentages are critical to coverage under the ACA. As a result, large employers should pay close attention to these adjustments because failing to offer affordable coverage as defined under the ACA could result in costly employer-shared responsibility penalties.

Under the ACA, the required contribution percentage determines whether an employer’s health coverage is “affordable” regarding employer-shared responsibility under Code § 4980H. The percentage decreases from the 9.5% baseline to 8.39% for plan years that begin in 2024. This decrease is greater than the 2023 indexing adjustment, which was 9.12%. Employers also should keep in mind that beginning in 2023, due to a glitch in IRS regulations, the affordability of employer-sponsored coverage for an employer’s family members is based not on the cost to cover the employee but the cost to cover the employee and those family members.

The other indexing adjustment affects the percentages used to calculate the amount of household income that individuals eligible for premium tax credits must contribute toward the cost of Exchange coverage. These percentages vary according to household income, and for 2024, they vary from zero to 8.5%, the same percentages that were in effect for 2023. The range of these percentages will remain the same in 2025 due to provisions in the American Rescue Plan Act of 2021 (ARPA) and the Inflation Reduction Act of 2022 (IRA).

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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