IRS Announces Updated 2024 ACA Affordability Threshold

The Internal Revenue Service (IRS) announced an updated new ACA affordability threshold of 8.39% of an employee’s household income for 2024 for Applicable Large Employers (ALE). The new affordability threshold is LOWER than the 9.12% ACA affordability threshold for 2023 and previous years.

As the affordability threshold is used to determine ACA compliance, a lower affordability threshold of employee income means that an employer may need to increase contributions to reduce employee cost (of the lowest base plan) to be compliant with the lower affordability requirement if using the exact safe-harbor dollar amount compared to rate of pay, W-2 or federal poverty level.

If a full time employee with “unaffordable” employer coverage applies to Covered California or another state’s marketplace exchange and qualifies for premium tax credit, the employer may be subject to employer shared responsibility assessments.