Compliance Connection: IRS Releases the Indexed 2020 Affordability Percentage

The IRS recently released Notice 2019-29 that adjusts the affordability percentage for 2020. The affordability rate for 2020 plan years will be 9.78%, which will be used with affordability calculations to determine employee affordability.

To avoid penalties under the Affordable Care Act, large employers must offer minimum value, affordable coverage to their full-time employees. For 2020, coverage will be considered affordable if it costs less than 9.78% of the employee’s rate of pay (lowest hourly rate of pay multiplied by 130 hours per month or lowest monthly salary for exempt employees. The IRS adjusts the percentage for calculating affordability each year.

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Contact Katie Miller or Nick Forside on LeClair Group’s Employee Benefits team with your questions.