The IRS released Revenue Procedure 2023-29 on August 23, 2023, which set the 2024 affordability safe harbor percentage for employer-provided medical coverage to 8.39%. This is an annually indexed amount and a sharp decrease from 2023. This affordability percentage affects both: (1) individuals’ eligibility for subsidies in the public health insurance marketplace, and (2) the employer affordability safe harbors used to avoid potential employer mandate penalties.
This Alert is relevant for any applicable large employer as defined under the Affordable Care Act (ACA) and provides: (1) a summary of the ACA’s employer mandate penalties; and (2) the employer affordability safe harbors and the effect of the 8.39% affordability safe harbor percentage when setting employee contributions for the 2024 plan year.
