OMA Connections Partner One Source Advisors reports that the IRS recently issued Revenue Procedure 2020-36 to index the contribution percentages to determine affordability of an employer’s plan under the Affordable Care Act. For plan years beginning in 2021, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

• 9.83% of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility; and
• 8.27% of the employee’s household income for the year, for purposes of an individual mandate exemption (adjusted under separate guidance). Although this penalty was reduced to zero in 2019, some individuals may need to claim an exemption for other purposes.

This is a slight increase from the affordability contribution percentages for 2020. As a result, some employers may have additional flexibility in setting their employee contributions for 2021 to meet the adjusted percentage. 8/10/2020