One of the compliance pieces of the Patient Protection and Affordable Care Act (PPACA) that has had an impact on how employer sponsored plans are designed is whether or not a plan is considered “affordable.” Since the plan’s passage, affordable has meant that an employee contribution be no higher than 9.5% of the employee’s household income for the year. For a single person with a federal minimum wage position, this equals roughly $89-90 per month.
On July 24, 2014 the IRS released Revenue Procedure 2014-37 to index the PPACA’s affordability percentages for 2015. Beginning on January 1, 2015 the affordability percentage will be 9.56%. This will not have a major impact on the affordability of a plan, but is worth noting.
There are several safe harbors that employers may consider when it comes to determining if their plan is affordable. These, and other useful information, can be read in the bulletin below.