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The affordability criteria, which is used to assess whether employer-sponsored health coverage is deemed affordable for employer shared responsibility, is 9.12% for 2023, down from 9.61% in 2022. This percentage is used to calculate affordability based on an employees required contribution for coverage.
for 2023 Tax Year. On September 27, 2023, the IRS releases the draft instructions of ACA forms, which clearly shows that there are no major changes made to the ACA forms and the codes, but the IRS has updated the ACA affordability percentage and e-filing threshold for the tax year 2023.
For 2023, the affordability percentage is 9.12% for plan years beginning in 2023, as described in our prior blog, 2023 ACA Affordability Decreases to 9.12%.
The Affordable Care Act (sometimes called the health care law, or ACA) established the Small Business Health Options Program (SHOP) for small employers (generally those with 150 full-time and full-time equivalent employees (FTEs)) who want to provide health and dental coverage to their employees.
The employer shared responsibility provision of the Affordable Care Act penalizes employers who either do not offer coverage or do not offer coverage that meets minimum value and affordability standards. These penalties apply to firms with 50 or more full-time equivalent employees.
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For tax year 2023, the 4980H(a) penalty is $240 per month for every full-time employee, or $2,880 per employee per year. The first 30 employees are considered an exemption and dont count toward this penalty. Beyond that number, however, it takes only one employee PTC to let the IRS know somethings wrong.
An employer must meet one of them to show that the coverage it has offered employees is affordable. 2024 ACA Affordability Percentage Decrease to 8.39%: For the second year in a row, the IRS has announced a decrease in the ACA affordability percentage used to determine compliance with the employer mandate.
Pay - or - Play Mandate: Employers are required to either provide health insurance for their employees or pay a penalty to offset costs the government incurs to provide health care for the uninsured. Applicable Large Employers (ALE) must offer Minimum Essential Coverage (MEC) or pay a penalty.

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