IRS Releases 2018 ACA Required Contribution Percentages
Guidance Affects ACA’s Premium Tax Credit & Individual Mandate Provisions
Consistent with prior guidance, the Internal Revenue Service (IRS) has announced adjustments to the required contribution percentages that will be used in 2018 to determine whether an individual is eligible for a premium tax credit and an affordability exemption from the individual shared responsibility provisions (the “individual mandate”).
Premium Tax Credit Eligibility
An individual may be eligible for a premium tax credit to purchase health coverage through the Health Insurance Marketplace (Exchange) if, among other things, he or she is not able to get affordable coverage through an eligible employer plan that provides minimum value. For this purpose, an employer-sponsored plan will be considered affordable for plan years beginning in 2018 if the portion of the annual premium an employee must pay for self-only coverage does not exceed 9.56% of his or her household income.
Individual Mandate Affordability Exemption
The individual mandate requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. One such exemption applies when the individual cannot afford coverage because the minimum amount he or she must pay for the premiums is more than a designated percentage of the individual’s household income. For plan years beginning in 2018, the designated percentage will be 8.05%.
Click here to read the IRS announcement.
