Insights

IRS Publishes the ACA's Affordability Percentage and Individual's Premium Tax Credit Table for 2019


On May 22, 2018, the IRS published Rev. Proc. 2018-34, which provides the 2019 premium tax credit (PTC) table and the employer contribution percentage requirements applicable for plan years beginning after Dec. 31, 2018.

As background, the ACA's employer-shared responsibility rules (also known as the employer mandate) require an employer to provide affordable, minimum value coverage to its full-time employees. The IRS's required contribution percentage is used to determine whether an employer-sponsored health coverage offers an individual affordable coverage, and the affordability percentage is adjusted for inflation each year. In addition, the ACA also provides a refundable PTC, based on household income, to help individuals and families afford health insurance through affordable insurance exchanges. The IRS provides the PTC percentage table for individuals to calculate their PTC.

For 2019, the ACA's affordability percentage will increase to 9.86 percent (up from 9.56 percent in 2018). For the employer mandate and affordability, this means that an employee's required premium contribution toward single-only coverage under an employer-sponsored group health plan can be no more than 9.86 percent of the federal poverty line or of an employee's W2 income or rate of pay (depending on which of the three affordability safe harbors the employer is relying upon).

The 2019 PTC table used to determine an individual's eligibility for PTCs is provided below:

Household Income Percentage of Federal Poverty Line Initial Percentage Final Percentage
Less than 133% 2.08% 2.08%
At least 133%, but less than 150% 3.11% 4.15%
At least 150%, but less than 200% 4.15% 6.54%
At least 200%, but less than 250% 6.54% 8.36%
At least 250%, but less than 300% 8.36% 9.86%
At least 300%, but not more than 400% 9.86% 9.86%

The revenue procedure is effective for plan years beginning on and after Dec. 31, 2018.

Employers should be mindful of the upcoming 2019 affordability percentages and make sure that the premium offerings for 2019 continue to be affordable for full-time employees, so as to avoid any employer-shared responsibility penalties. The penalties related with employer shared responsibility remain the law (despite the fact that the ACA's individual mandate will be repealed beginning in 2019).

Rev. Proc. 2018-34 »